The Centre has stepped up its crackdown on restaurants that continue to levy mandatory service charges, making it clear that customers cannot be forced to pay the additional amount. Union Consumer Affairs Minister Pralhad Joshi on Monday warned that restaurants violating government guidelines and consumer protection laws would face strict action, including penalties.
The latest warning comes as the government intensifies its efforts to curb unfair billing practices in the hospitality sector. According to Joshi, action has already been initiated against 41 restaurants across the country after complaints that they were imposing mandatory service charges on customers despite clear government directions.
Speaking on the issue, the minister said a service charge is entirely voluntary and should never be treated as a compulsory payment. Customers have the right to decide whether they want to pay the charge based on the quality of service they receive. Restaurants, he said, cannot automatically add the amount to bills or refuse to remove it if a customer objects.
Joshi reiterated that forcing diners to pay a service charge amounts to an unfair trade practice under the Consumer Protection Act. He urged restaurant owners to comply with the government’s guidelines and warned that establishments ignoring the rules could face legal action and financial penalties.
The government has also appealed to consumers to be aware of their rights while dining out. If a restaurant insists on collecting a mandatory service charge or refuses to remove it from the bill, customers have been asked to report the matter through the National Consumer Helpline or the consumer grievance portal. Officials said consumer complaints play an important role in identifying repeat offenders and ensuring timely action.
The Department of Consumer Affairs has repeatedly clarified that a service charge is different from statutory taxes such as Goods and Services Tax (GST). While GST is a government levy that customers are legally required to pay, a service charge is decided by the restaurant and cannot be made compulsory. Customers are free to pay the charge if they are satisfied with the service, but they cannot be forced or pressured into doing so.
The renewed warning follows several complaints from diners who claimed that some restaurants continued to add service charges to bills without seeking consent. In several cases, customers also alleged that restaurant staff refused to remove the charge even after they requested it. The government believes such practices create confusion among consumers, many of whom mistakenly assume the charge is mandatory.
Joshi said the Centre is committed to protecting consumer rights and ensuring transparency in restaurant billing. He added that businesses must adopt fair trade practices and clearly inform customers that service charges are optional. The objective, he said, is not to target the hospitality industry but to ensure that consumers are treated fairly and are billed honestly.
Consumer rights organisations welcomed the government’s latest move, saying stronger enforcement will help eliminate misleading billing practices. They argued that customers should have complete freedom to reward good service voluntarily instead of being compelled to pay an additional charge. Greater awareness, they said, would also help consumers distinguish between optional service charges and mandatory government taxes.
The hospitality industry, however, has maintained that service charges help restaurants reward staff and maintain service standards. Some restaurant bodies have argued that customers are informed about the charge through menus and notices displayed at their establishments. Even so, the Centre has reiterated that displaying notices does not make the charge mandatory, and restaurants must remove it if a customer refuses to pay.
Officials said monitoring and inspections will continue across the country, and more establishments could face action if violations are found. Consumers have also been advised to retain their bills and payment receipts while filing complaints, as these can serve as evidence during investigations.
The government’s latest warning signals a tougher approach towards protecting consumer rights and ensuring transparency in the hospitality sector. As enforcement gathers pace, restaurants are expected to review their billing practices and comply with consumer protection guidelines to avoid penalties. At the same time, customers are being encouraged to remain informed, check their bills carefully and report any violations. The Centre believes that greater awareness, combined with stricter enforcement, will help create a fairer dining experience where service charges remain voluntary and consumers can exercise their right to choose without pressure.