Bengaluru: Central Consumer Protection Authority (CCPA) has again cracked down on restaurants unilaterally levying service charges, warning that such a move amounts to an unfair trade practice and can attract a penalty of up to Rs 50,000.In a recent directive, CCPA said service charges must remain optional and made it clear that diners have the right to refuse the charge if added to their food bill without consent. Hotel associations TOI spoke to said they would comply with the directive, while hinting at a legal challenge.The fresh warning follows a steady rise in complaints that restaurants across the country add service charges rather casually and without prior disclosure. CCPA has initiated suo motu proceedings against 27 restaurants nationwide and pulled up a food chain on Feb 4 for levying the charge.According to the authority, the action was based on complaints received through National Consumer Helpline, supported by copies of invoices showing mandatory service charges. CCPA held that such practices constitute unfair trade practices under Section 2(47) of the Consumer Protection Act, 2019.While customers welcomed the move, saying tips should depend on the quality of service and not out of compulsion, GK Shetty, president, Karnataka State Hotels Association, said they introduced the charge to “fairly share tips” among all staff — from kitchen to front desk — unlike cash tips that usually go to one employee.“Globally, 10%–20% service charges are common. We kept (it) at 5%. The Rs 50,000 penalty is a heavy burden amid rising costs. The charge is removed if a guest objects. We are planning to write to the govt, seeking suitable modifications,” Shetty said without elaboration.PM Ananth Narayan, head of Bengaluru chapter, National Restaurant Association of India, said: “When govts levy multiple layers of taxes, cesses, and surcharges, it is accepted as policy. When ride-hailing, delivery, and aggregator platforms actively prompt customers for tips, it is celebrated. When restaurants introduce a clearly disclosed, modest service charge, it becomes questionable. NRAI is contesting the issue in court.“US Mahendra, founder of coffee chian Hatti Kaapi, said service charge should remain optional and termed the penalty clause “harsh”. “Instead, govt notifications or posters in restaurants should declare service charge is optional,” he added.+++++Inset – 1Quote Boxes:“Restaurants do remove service charges on request. Tips are a personal choice; automatically added service charges are undesirable. If diners don’t enquire, then charges stay on the bill.”— Mrinmoyee Roy, 3rd-year BSc student from SG Palya++++“Last year, our bill came to around Rs 9,000, with Rs 700 added as service charge, which was high. We sought its removal, and the restaurant politely suggested paying 25%, which we gladly did. Later, another restaurant refused to remove the charge. Shocking was when my friend saw bills with notes that said “not to ask for a waiver”. It’s up to the customer to tip. Compulsory charges could spoil the mood.— Devaprana Gosh, 22, second-year MA student+++++++Many customers are hesitant to seek removal of charge for multiple reasons. Now, it’s up to the customers. This encourages better accountability from restaurants. — Pavan Kumar, 32, businessman from RajajinagarInset – 2VOLUNTARY, OPTIONAL * No hotel or restaurant shall add service charge automatically in food bill* No service charge shall be collected by any other name* Consumers must be clearly informed it is voluntary, optional* No restriction on entry or provision of services shall be imposed based on refusal to pay service charge* Service charge shall not be added to the bill or subjected to GST MSID:: 128212105 413 |
