Dining out? Don’t pay service charge! Minister Pralhad Joshi warns restaurants against violations; Check rules here

Union Consumer Affairs Minister Pralhad Joshi has issued a stern warning to restaurants that continue to impose service charges by default, saying establishments violating consumer protection rules will face penalties and legal action.

The warning comes after the Central Consumer Protection Authority (CCPA) initiated suo motu action against 41 restaurants across the country for allegedly adding service charges to customers' bills without obtaining their explicit consent. The action follows complaints received through the National Consumer Helpline (NCH), backed by invoices showing mandatory service charges being added automatically, according to Economics Times.

READ THIS: FDA raids Siya Goyal's family shop in Pune, seizes food products worth ₹ 8.14 lakh

Service charge is voluntary

In a post on X, Union Consumer Affairs Minister Pralhad Joshi restated that service charges are voluntary and entirely at the consumer's choice.

"The CCPA has imposed penalties on violators, taken action against restaurants violating consumer protection law and directed them to discontinue the automatic levy of service charge," Joshi said. He also warned that restaurants continuing the practice would face stringent action, including financial penalties and reputational damage.

Crackdown on 41 restaurants

According to the Ministry of Consumer Affairs, the CCPA found that automatically adding service charges violates the guidelines to prevent unfair trade practices and protect consumer Interest about the levy of service charges in hotels and restaurants, issued in July 2022.

The authority said such practices also amount to an unfair trade practice under Section 2(47) of the Consumer Protection Act, 2019. The investigation was initiated after consumers submitted bills showing service charges had been added without their consent.

DON'T MISS: West Bengal to get the world's largest curd production plant under a ₹700-crore dairy project

Restaurants under scanner

The CCPA has already passed a final order against Chaayos (Sunshine Teahouse Pvt. Ltd.), imposing a ₹50,000 penalty for automatically levying service charges. The company has also been directed to refund the collected service charge to the affected consumer and modify its billing software to ensure service charges are not added by default.

Final orders have also been issued against several other establishments, including Cafe Blue Bottle (Patna), China Gate Restaurant Pvt. Ltd., Fiesta Barbeque Nation, FOO Ahmedabad, L'Opera French Bakery, and Zorro – The Luxury Night Club. Proceedings against additional restaurants are currently underway.

What the rules say

Under the CCPA guidelines:

• Restaurants cannot automatically add service charges to food bills.
• Service charges cannot be collected under any other name.
• Customers cannot be forced to pay service charges.
• Restaurants must clearly state that any service charge is optional and voluntary.
• Customers cannot be denied service or entry for refusing to pay a service charge.
• GST cannot be charged on a service charge amount that is not voluntarily paid.

ALSO READ: Sonam Wangchuk to end hunger strike today? 59-year-old activist lists 3 conditions from hospital bed

Consumers urged to report violations

The Consumer Affairs Ministry has urged customers to report restaurants that continue to levy mandatory service charges through the National Consumer Helpline (1915) or the NCH platform. The CCPA said it will continue monitoring complaints and take action against establishments found violating consumer protection laws.