Dining Out? Here's What To Do If A Restaurant Refuses To Remove Service Charge
Dining Out? Here's What To Do If A Restaurant Refuses To Remove Service Charge Written By, Last Updated: July 20, 2026, 11:22 IST CCPA's 2022
Dining Out? Here's What To Do If A Restaurant Refuses To Remove Service Charge Written By, Last Updated: July 20, 2026, 11:22 IST CCPA's 2022 guidelines state that restaurants cannot automatically or by default add service charge to food bills and can't refuse service or entry if a customer declines to pay it Rapid Read A service charge is an amount collected by the restaurant, typically between 5 per cent and 10 per cent of the bill, which restaurants say is meant to compensate staff for the service provided. (AI-Generated Image) It’s a Saturday evening, and you pick an oft-recommended restaurant for a quiet meal with your loved ones. Dinner over, you ask for the bill, and notice an extra 10 per cent added as service charge. When you ask for it to be removed, the waiter tells you it’s “mandatory". But is it really? The issue is back in the spotlight after Union Consumer Affairs Minister Pralhad Joshi warned restaurants against levying mandatory service charges, saying violators could face penalties. Speaking to ET, Joshi said: “I have taken this very seriously and directed the authorities to initiate strict action. Restaurants that continue this illegal practice will not only face hefty fines but also invite negative publicity that could hurt their hard-earned reputation." The statement followed the Central Consumer Protection Authority (CCPA) initiating action against 41 restaurants, including popular chains such as Chaayos and Barbeque Nation, over complaints that they were imposing service charges by default. But can restaurants legally force you to pay? Here’s what consumers need to know. What Is A Service Charge? A service charge is not a government tax. It is an amount collected by the restaurant, typically between 5 per cent and 10 per cent of the bill, which restaurants say is meant to compensate staff for the service provided.
Unlike GST, which is deposited with the government, a service charge is retained by the restaurant. Different establishments may have different policies on how it is distributed among employees. Can Restaurants Force You To Pay It? According to the Centre’s consumer protection guidelines, no. The CCPA’s 2022 guidelines state that restaurants cannot automatically or by default add service charge to food bills, cannot describe it as compulsory or mandatory, cannot refuse service or entry if a customer declines to pay it, and cannot add it under any other name to avoid the guidelines. In other words, consumers should have the freedom to decide whether they want to pay a service charge. Then Why Are Restaurants Still Charging It? This is where the confusion begins. Soon after the CCPA issued its guidelines, restaurant associations challenged them in court, arguing that service charge is part of the restaurant’s pricing policy, customers are informed in advance through menus or display boards, and if customers choose to dine despite the disclosure, they have accepted the terms. The government, however, maintains that consumers cannot be compelled to pay an additional charge merely because it appears on the menu or bill. Since the matter is still before the courts, many restaurants continue to levy service charges. What Has The Delhi High Court Said? During hearings, the Delhi High Court observed that making service charge mandatory could amount to an unfair trade practice. The court has questioned whether restaurants can compel customers to pay an amount beyond the listed price and applicable taxes. However, the broader legal challenge is still pending, meaning there is no final verdict yet on the issue. If The Menu Says ‘Service Charge Applicable’, Does That Make It Mandatory?
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