Why do restaurants charge a 10% service charge in addition to food charges ?

For many years, India used to have a concept where the rate of an item would include all charges and taxes, so that you would know the final rate that you would need to pay for what you were buying. However, many establishments started to change their policies, showing the rate for the item, and then when you went to buy the item, the tax was levied extra (including being applicable for food items, where the VAT rate of 12% makes the final rate much higher than the pre-tax rate). The only good point is that a number of places quote rates inclusive of rate.
The concept of paying tips for the food you consume in restaurants and hotels has been growing steadily, but as a matter of concept, Indians are not exactly very enthusiastic about giving tips that are more than 5%. After all, if you are paying a bill for Rs. 3000 in a decent restaurant, who will contemplate paying an additional Rs. 300 as tip, since that seems like a very high charge. So, if you pay Rs. 3000 as the amount of food and drinks consumed, and then add a 12% VAT of Rs. 360, it already seems like a very high amount, and on top of this, if you are also asked to pay Rs. 300 as a tip, you end up paying Rs. 660 as taxes plus tip, which is a much enhanced amount over the Rs. 3000 of food and drinks you actually consumed, which can pinch people.
And now, a number of restaurants are going ahead with dispensing with the voluntary payment of tips, and adding a service charge which is to be paid additional over the food item. For most people, being asked to pay an additional 10% as a forced tip can seem like extortion, since even if you are not satisfied with the service, you would still be paying the same amount. And of course, the concept atleast in India is that when you pay for the food, you are also paying for the service, and so any tip that you would pay would be a bonus for the staff of the restaurant (and even when you add a tip to the bill and pay by the credit card, you may not believe that the tip amount reaches the waiters).
So, I was in a restaurant where I had a total charge of food and drinks of Rs. 3200, and after taxes and service charge, had to pay a total of more than Rs. 3800, especially hurting since I did not even really enjoy the food; hence the question, why should I pay a mandatory service charge ? I will not be going to that restaurant again.

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