Mandatory service charge 'unfair', Mum eatery told to refund amount

MUMBAI: Holding Girgaum Chowpatty-based Cream Centre guilty of unfair trade practice & applying restrictive trade practice by charging a mandatory 5% service charge on food and beverage bills, a district consumer commission ordered it to refund the Rs 29 service charge with a compensation of Rs 25,000 to a city-based lawyer.
The commission said the restaurant's act of levying mandatory 5% service charges over and above food & beverage bills falsely represents that services are of a particular standard, quality, & great as they provide range of other service, including ambience of the restaurant, air conditioning, crockery, carpets, furniture, staff including waiters for service.
"It is the bouquet of additional services that completes the experience of customers who choose to dine in at the restaurant. Building this narrative to collect 5% mandatory service charge from customers is highly objectionable as well as illegal and hence cannot be justified at all," the commission said.
It said that gratuity or tip are separate transactions between customer and service staff. "Hotel management has no role in this. It is up to the customer to decide the amount of tip and gratuity."
Yogesh Patki had submitted the complaint before South Mumbai District Consumer Disputes Redressal Commission on Jul 21, 2017, against the restaurant owner, Prince Cuisines Pvt Ltd.
The commission pointed out that service charge was mentioned on the menu such that customer will believe it is a statutory levy. "Presentation of wording of the Service Tax and Service charge together in one line brings a belief that this is a statutory levy and the restaurant owner is empowered by statute to collect this from him/her which is incorrect," it stated.