Mumbai Grahak Panchayat Flags 9 Restaurants For 'Mandatory' Service Charges Despite Court Ruling

Mumbai: The Mumbai Grahak Panchayat (MGP) has written to the chairperson of the Central Consumer Protection Authority (CCPA) regarding alleged violations of the CCPA’s directives prohibiting restaurants and hotels from levying mandatory service charges on consumers. The FPJ contacted all the restaurants tabled in the letter for their alleged violations, but none of them responded.

In the letter, MGP chairman Advocate Shirish Deshpande referred to the Delhi High Court judgment dated March 28, 2025, which categorically upheld the validity of the CCPA directives and dismissed writ petitions filed by hotel and restaurant associations. “The court’s ruling has reinforced the principle that consumers cannot be compelled to pay service charges against their wishes,” the letter stated.

The MGP said that despite clear legal position, its vigilance efforts revealed that several restaurants continue to compulsorily charge and recover service charges, either directly or under different nomenclatures such as “charity contribution, staff welfare or staff contribution”. In some cases, the menu cards allegedly carry fine-print notes stating, “A voluntary 10% tip for the service staff has been proposed to be added to your bill. If you would like it removed, please let your server know.”

In other instances, the note reads: “We provide for a discretionary staff contribution for the benefit of the kitchen and service staff working at the restaurant. This will be removed if you do not opt for it.” The MGP has identified nine restaurants that allegedly levied additional charges. These include Mumbai establishments such as Pizza by the Bay, which reportedly added a 10% tip under the name of “charity commission”, along with the note offering removal on request.

Sizzler’s – The Food Studio allegedly charged a 5% tip with a note stating that an additional service charge is levied. Only Parathas, TAT, and Kamat’s Legacy were also named for charging extra amounts as service charges. Banana Leaf and Punjab Grill allegedly charged 5% and 10%, respectively, under the labels “staff welfare” and “staff contribution”. The MGP has also sought an investigation into their records for the last three financial years to determine the total amount collected under the head “service charge” or any other similar nomenclature, and to direct that the entire amount, along with penal interest, be credited to the Central Consumer Welfare Fund. Additionally, the MGP has requested the CCPA to issue a fresh public advisory.

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