Mumbai Restaurant Penalised for Forcing Service Charge on Diners

• Mumbai restaurant fined Rs 50,000 for mandatory service charge on bills.

• Consumer complaint showed service charge added without customer consent.

• CCPA ruled service charges optional, not automatic or compulsory payments.

• Restaurants must modify billing systems to allow diners to decline charges.

A Mumbai restaurant operator has been fined Rs 50,000 after a consumer complaint showed that a service charge was added to bills without giving diners the option to decline it, according to a recent report by The Indian Express.

The Central Consumer Protection Authority said service charges cannot be imposed as mandatory payments. The authority noted that while restaurants are free to levy such charges, they must be optional and cannot be imposed by default through billing systems.

Customer Objection Led To Probe

The case began when a customer noticed that a service charge had been automatically added to the restaurant bill during a visit to one of the firm’s outlets in Mumbai. The charge was calculated as a percentage of the food bill and was included along with applicable taxes.

When the diner objected and asked for the service charge to be removed, the request was reportedly turned down. The diner later filed a complaint with the consumer authority, saying the service charge was added without consent and was never clearly mentioned upfront.

The authority found from billing records that the service charge was not added manually but was preset in the restaurant’s billing system. This meant that every customer was charged the additional amount unless they noticed it and objected, which the authority said defeated the very idea of customer choice.

Billing Practice Found To Be Unfair

The investigation also revealed that the practice was not limited to a single transaction. Records showed that the automatic service charge had been applied across multiple outlets run by the firm over a defined period.

The authority pointed out that consumer protection rules draw a clear line between statutory levies and discretionary charges. Taxes such as GST must be paid by customers, but service charges are not mandated by law. Restaurants are required to inform customers in advance and honour their decision if they choose not to pay.

By embedding the charge into the billing system, the restaurant effectively made it compulsory, the CCPA observed. This, it said, amounted to an unfair trade practice under consumer law.

The authority recorded that the restaurant was slow to respond to the inquiry and did not furnish all documents within the stipulated time. It added that discontinuing the practice later did not absolve the firm of the breach.

Message For Consumers And Businesses

Apart from the fine, the authority has asked the restaurant to rework its billing system so that service charges are not levied automatically and to confirm the changes in writing.

The order reinforces a diner’s right to question add-on charges, while signalling tougher action for restaurants that ignore billing norms.

With restaurant bills rising, authorities have stepped up scrutiny of how charges are levied. The order reiterates that service charges cannot be imposed without consent.