Mumbai restaurant fined Rs 25,000 for mandatory service charge

A district consumer commission in Mumbai has ruled against Cream Centre, a restaurant located in Girgaum Chowpatty, for its practice of imposing a mandatory 5% service charge on food and beverage bills. 

The commission found this practice to be unfair and a restrictive trade practice, ordering the restaurant to refund the charged amount of Rs 29 to a city-based lawyer, along with a compensation of Rs 25,000.

The commission highlighted that by levying a mandatory service charge, the restaurant falsely represented that its services were of a particular standard and quality, including aspects such as ambience, air conditioning, crockery, and staff services. It emphasized that such additional services are part of the overall dining experience and should not be used to justify a mandatory charge.

Additionally, the commission clarified that gratuity or tips are separate transactions between customers and service staff, and the hotel management has no role in determining the amount. 

The complaint was filed by Yogesh Patki before the South Mumbai District Consumer Disputes Redressal Commission in 2017 against the restaurant owner, Prince Cuisines Pvt Ltd.

The commission criticized the presentation of the service charge on the menu, suggesting that it could mislead customers into believing it is a statutory levy. It emphasized the need for transparency and clarity in such practices to ensure consumer rights are protected.