Bengaluru man fights automatic service charge, wins refund & Rs 7,000 relief

Bengaluru: Service charge dragged an RR Nagar bar into a consumer dispute when a 27-year-old man objected to an automatic charge levied on his food bill. The II additional district consumer disputes redressal commission termed the levy an unfair trade practice and ordered a full refund with compensation.The saga began on the evening of Aug 18, 2025, when Harsha Prabhakar, a resident of Chikkalsandra, along with his friends, visited Stories Bar & Kitchen in Rajarajeshwari Nagar. He was presented with a bill totalling Rs 3,443, including an arbitrarily added 10% service charge, amounting to Rs 307.
This imposition was made without any prior, explicit, or informed consent from Prabhakar, transforming what should have been a voluntary gratuity into a compulsory levy. Shocked by this unwarranted charge, Prabhakar immediately objected to its inclusion and explicitly requested its removal from the bill. However, the restaurant, with what he described as brazen disregard for consumer autonomy, adamantly refused to accede to his request, stating that it levied a 10% service charge. When he argued that service charge was optional in nature, the staff disregarded his contention and asked him to clear the bill. Left with no recourse, Prabhakar was compelled to pay the full bill under protest. He alleged that this act constituted a restrictive trade practice by imposing an unjustified cost and condition. The payment was ultimately processed through UPI and cash.Prabhakar issued a legal notice, dated Aug 19, 2025, to the eatery. When there was no response, he filed a consumer complaint on Sept 17, 2025. He also contended that the restaurant's continued practice of auto-levying service charge posed an ongoing threat to consumer rights. Notice was served on Stories Bar & Kitchen, but it failed to appear and was placed ex parte. After going through all the evidence, the commission noted that the documentary evidence placed on record also remained unchallenged. The commission noted that the 2022 Central Consumer Protection Authority (CCPA) guidelines clearly prohibit hotels and restaurants from imposing service charge in bills and allow consumers to file complaints in case of violation. The commission held that the restaurant had indulged in an unfair trade practice by levying the service charge in the bill issued to Prabhakar. The restaurant did not contest the case or demonstrate how it did not commit any unfair trade practice. During the oral arguments, counsel for Prabhakar cited the March 28, 2025 judgment of the Delhi high court on petitions by the National Restaurant Association of India and the Federation of Hotel and Restaurant Associations of India against the Union of India. The court held that CCPA is fully empowered to issue binding guidelines under the Consumer Protection Act, 2019. It ruled that a service charge or tip is purely voluntary and cannot be made compulsory, and that automatic levy in a coercive manner violates consumer rights and amounts to an unfair trade practice. It also clarified that merely displaying a service charge on the menu does not bind consumers, and any tip must be left to the customer's discretion. The court upheld the validity of the CCPA guidelines and directed all restaurants to comply with them. On Feb 13, the commission bench, comprising president Vijaykumar M Pawale and member Anuradha, ordered the restaurant to refund the service charge with 18% interest from the payment date till realisation. It also ordered the eatery to pay Rs 5,000 as compensation and Rs 2,000 as litigation costs.