In a significant order, the Kolkata Consumer Dispute Redressal Commission held that restaurants cannot forcibly impose service charge on a customer. The Commission has directed the restaurant to pay back the service charge amount that it collected with a compensation amount.
The bench of President Swapan Kumar Mahanty and member Ashok Kumar Ganguly referred to the Fair Trade Practice guidelines issued by the Central government. As per the guidelines, service charge on restaurant bill is totally voluntary not mandatory and cannot be forcibly imposed on the customer.
“The OPs must have been aware of the guidelines of Fair Trade Practice relating to charging of service charge from consumers by hotels/ restaurants issued by Department of Consumer Affairs, Government of India, inter alia stipulating that service charge on hotel and restaurant bills is totally voluntary and not mandatory,” reads the order.
The Commission considered the restaurant’s act to collect service charges illegal, malafide and contrary to law.
In 2018, the complainant and his friends had dinner at Yauatcha Kolkata. He resisted paying the service charge but was told by the manager that it is mandatory to pay the service charge.
The complainant served a legal notice to the restaurant and had sought apology and ₹25,000 as compensation. After getting no response on the same, he filed a consumer case accusing the restaurant of illegally pocketing service charge.
The Commission took note of the fact that though a legal notice was served, there was no reply by the restaurant.
In April 2017, the Government of India had issued guidelines on fair trade practice which signifies that payment of service charge is optional and depends entirely on the discretion of consumers.
“The OP-1 [restaurant] deliberately failed and/or neglected to ameliorate the grievance of the complainant. The OP-1 has committed unfair trade practice against the complainant,” noted the bench.
Taking note of the fact that the complainant’s evidence remained unchallenged, the Commission found that the restaurant had practiced unfair trade practice. Therefore, the bench directed the restaurant to refund the service charge and also pay ₹13,000 as compensation and litigation charges to the complainant within 30 days.