A charge sparks big warning for restaurant biz
Bengaluru: Union Consumer Affairs Minister Pralhad Joshi on Sunday warned restaurants against levying service charges on customer bills, saying establishments that continue the practice would
Bengaluru: Union Consumer Affairs Minister Pralhad Joshi on Sunday warned restaurants against levying service charges on customer bills, saying establishments that continue the practice would face stringent action, including penalties and reputational damage."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," Joshi told ET.The minister said the practice had become widespread across major cities, including Delhi, Mumbai and Bengaluru.
He recounted his own recent experience at a Bengaluru restaurant where a service charge was added to the bill. The charge was withdrawn after his friends questioned it, and the restaurant apologised.Joshi urged restaurants to modify their billing software if service charges or similar levies were being added automatically to customer invoices.His remarks came after the Central Consumer Protection Authority (CCPA) said it had initiated action against 41 restaurants across the country for imposing service charges on customers.The minister said the Delhi High Court had upheld the validity of the CCPA guidelines prohibiting hotels and restaurants from automatically levying service charges, dismissing challenges to the consumer regulator's powers.According to an official statement, the CCPA imposed a penalty of Rs 50,000 on Chaayos (Sunshine Teahouse) and directed it to refund the service charge collected from the complainant.
The authority has also passed orders against Cafe Blue Bottle in Patna, China Gate Restaurant, Fiesta Barbeque Nation, FOO Ahmedabad Restaurant, L'Opéra French Bakery, Zorro, and The Luxury Night Club, among others.Joshi said charging a mandatory service fee amounts to an unfair trade practice under Section 2(47) of the Consumer Protection Act, 2019. He urged consumers to report such instances to the ministry through email or the Consumer Helpline (1915), along with supporting details."There is a clear distinction between a voluntary tip paid by a customer and a mandatory service charge imposed by a restaurant.
The latter is not permissible under the law," he said.
The BriefWire