‘Not Justified, It’s Illegal’: Mumbai Restaurant Slapped With Rs 25K Fine For Mandatory Service Charge (Image Source: Unsplash)Mumbai: A district consumer commission concluded that imposing a mandatory service charge is illegal and unjustified.
Announcing the verdict, the commission asked the Girgaum Chowpatty-based Cream Centre to pay Rs 29, which the latter charged as obligatory service tax.
This comes after the commission found the centre guilty of unfair trade practice and applying restrictive trade practice by imposing a mandatory service charge.
It is highly objectionable as well as illegal to build the narrative to collect 5 per cent mandatory service charge from customers.
“Words of the Service Tax and Service charge together is presented in one line.
‘Not Justified, It’s Illegal’: Mumbai Restaurant Slapped With Rs 25K Fine For Mandatory Service Charge (Image Source: Unsplash)
Mumbai: A district consumer commission concluded that imposing a mandatory service charge is illegal and unjustified. Announcing the verdict, the commission asked the Girgaum Chowpatty-based Cream Centre to pay Rs 29, which the latter charged as obligatory service tax. The centre has also been ordered to pay Rs 25,000 to a city-cased lawyer as compensation. This comes after the commission found the centre guilty of unfair trade practice and applying restrictive trade practice by imposing a mandatory service charge.
The commission further pointed out that by imposing a compulsory 5 per cent service fee on top of food and beverage bills, the hotel wrongly implies that the services provided to the customer meet a specific standard or quality. It is because the restaurant offers a variety of additional services, such as using quality crockery, creating a pleasant ambiance, maintaining carpets and furniture among other services.
"All additional services completes the experience of customers who comes to the restaurant to dine in. It is highly objectionable as well as illegal to build the narrative to collect 5 per cent mandatory service charge from customers. Hence, it cannot be justified at all," said the commission quoted by a media report.
It further noted that the tip or gratuity are separate transactions. It takes place between customer and service staff that has nothing to do with Hotel staff. "Hotel management has no role in it. It is the customer to decide the amount of tip and gratuity".
A complaint was submitted by Yogesh Patki before South Mumbai District Consumer Disputes Redressal Commission on July 21, 2017. It was against the restaurant owner, Prince Cuisines Pvt Ltd, reported Times of India
The commission also highlighted the way service charge was written in the menu as if it was a statutory levy. “Words of the Service Tax and Service charge together is presented in one line. It brings a belief that this is a statutory levy. It implies that the restaurant owner is empowered by statute to collect this from him/her which is incorrect," it stated.
