Service Charge In Restaurants Voluntary Not Mandatory; Forcible Imposition Constitutes Unfair Trade Practice : Consumer Forum

The Kolkata District Consumer Disputes Redressal Forum has recently ruled that restaurants cannot forcibly impose service charge on a customer and accordingly proceeded to direct the concerned restaurant to hand back the service charge it collected from a customer along with a compensation amount.

A Bench comprising President Swapan Kumar Mahanty and member Ashok Kumar Ganguly held that imposing a service charge on a restaurant bill is totally voluntary and not mandatory as per the guidelines for Fair Trade Practice issued by the Central government.

"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," the order read.

The Commission thus ruled that the restaurant had committed unfair trade practice towards the complainant and further that the imposition of service charge was illegal, malafide and contrary to law.

Background

In the instant case, the complainant one Arkadeep Sarkar and his friends had gone for dinner at Yauatcha in Kolkata back in the year 2018. He was forced to pay the stipulated service charge by the restaurant authorities as he was told that such imposition of service charge was mandatory at their restaurant.

Consequently, the complainant paid the service charge in order to avoid a confrontation however he later served the restaurant a legal notice citing existing statutory provisions and accordingly demanded an apology and Rs 25,000 as compensation.

On receiving no response, the instant consumer case had been filed by the complainant for "illegally pocketing service charge".

Observations

The Bench noted that although notice had been served, no written statement in reply was filed by the restaurant.

Addressing the grievance raised, the Commission observed,

"Therefore, we are of the view that the conduct of the OP-1 is illegal malafide and contrary to the principles of law as stipulated under the Consumer Protection Act and the OP-1 deliberately failed and/or neglected to ameliorate the grievance of the complainant."

It further ruled that the restaurant had committed unfair trade practice and that the evidence presented by the complainant remained unchallenged.

It may be noted that the Government of India in April 2017 had issued guidelines on fair trade practices which inter alia had stipulated that payment of service charge is optional and depends entirely on the discretion of consumers.

Accordingly, the restaurant was directed to refund the service charge in full as well as pay Rs 13,000 as compensation and litigation charges to the complainant within 30 days.

Case Title: Arkadeep Sarkar v. Yauatcha and Ors 

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