Hyderabad: Jubilee Hills Broadway fined Rs.15k for levying illegal service charge

In April 2017, the Government of India issued guidelines on fair trade practice which signifies that payment of service charges is optional and depends entirely on the discretion of consumers.

By Nimisha S Pradeep  Published on  6 Dec 2022 5:32 AM GMT
Hyderabad: Jubilee Hills Broadway fined Rs.15k for levying illegal service charge

Hyderabad: 'Broadway The Brewery' in Jubilee Hills has been directed to pay Rs.15,521 as compensation to a customer for levying the service charge over and above the price mentioned on the menu card.

This included a refund of Rs.521 which the complainant paid as a service charge, Rs.10,000 towards the mental agony suffered by him, and Rs.5,000 to cover the legal expenses incurred by the complainant. Broadway is directed to comply with the order in 45 days.

What happened

Complainant Kandala Venkatesh, a resident of Kothapet in Hyderabad went to Broadway The Brewery situated in CBI colony in Jubilee Hills with his friends for dinner on October 24, 2021. The pub gave him a bill of Rs.5,903 which included a service charge of Rs.521.

Venkatesh, who is a practicing advocate called the steward and asked him to remove the service charge and allow him to give the tip as per his satisfaction. The steward expressed inability saying it can cost him his job.

The complainant resisted paying the service charge. But the manager of the pub said that it was their right to charge the service charge. He said it is mentioned on the menu card and it was mandatory to pay the service charge. Eventually, Venkatesh paid the bill.

Venkatesh served a legal notice to Broadway on January 12, 2022. However, they did not respond. Venkatesh filed a complaint in the Hyderabad District Consumer Dispute Redressal Commission.

Responding to the complaint, Broadway argued that there was no request from the complainant to remove the service charge component. They provided a number of bills and receipts to prove that payment of the service charge was optional and when the customer was making a request for deletion of the service charge, it was deleted from the bill.

What do the GoI rules of 2017 say?

In April 2017, the Government of India issued guidelines on fair trade practice which signifies that payment of service charges is optional and depends entirely on the discretion of consumers. The GoI said that it had come to the notice of the Department of the Ministry of Consumer Affairs, Food and Public Distribution that some hotels and restaurants were charging tips or gratuities from the customers without their consent in the name of service charges.

The GoI came with a set of guidelines that said that a component of service is inherent in the provision of food and beverages ordered by a customer, and therefore, the pricing of the product is expected to cover both the goods and service components. Also, the guidelines reiterated that placing an order by a customer amounts to his / her agreement to pay the prices displayed on the menu card along with the applicable taxes. Charging for anything other than the aforementioned, without the express consent of the customer, would amount to unfair trade practice, read the guidelines.

Commission's observations

District Consumer Disputes Redressal Commission noted that Broadway did collect a 10% service charge apart from the 2.5% CGST and 2.5% SGST in the bill amounting to Rs.5,301.

"When the complainant resisted the payment of the service charge, the opposite party should not have forced him to pay the same. It is the discretion of the customer to pay the amount if he likes the services. The opposite party has committed unfair trade practice against the complainant and there was a deficiency of service by the opposite party," noted the Commission.

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