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The Central Consumer Protection Authority has taken action against 27 restaurants across India for illegally levying service charges by default. Following consumer complaints, the authority found that several eateries were automatically adding a service charge, usually around 10 per cent, without customer consent. The CCPA has imposed penalties of up to INR 50,000, ordered refunds to affected customers, and directed restaurants to modify their billing systems. The move follows a Delhi High Court ruling that upheld the illegality of mandatory service charges. The action reinforces consumer rights and sends a clear message to restaurants and hotels to comply with billing guidelines, as regulatory scrutiny of unfair trade practices in the hospitality sector continues to tighten.
The Central Consumer Protection Authority (CCPA) has taken suo motu action against 27 restaurants across India for levying service charges on customers by default, a practice declared illegal under consumer protection laws. The authority has imposed penalties of up to INR 50,000 on erring establishments, directed them to refund the service charge amounts to affected customers, and asked them to modify their billing systems. Advertisement
The action followed multiple consumer complaints received through the National Consumer Helpline. Based on these complaints, the CCPA initiated investigations and found that several restaurants were automatically adding service charges to food bills without giving customers a choice.
In an official statement, the Department of Consumer Affairs said the CCPA took cognisance of violations under Section 2(47) of the Consumer Protection Act, 2019, which defines unfair trade practices. Mandatory collection of service charges has been categorised as such a practice.
The investigation revealed that some restaurants were routinely adding a 10 per cent service charge by default. Establishments named in the action include Caf Blue Bottle in Patna and China Gate Restaurant Pvt Ltd, operating the Bora Bora outlet in Mumbai. Invoices submitted as part of the complaints clearly showed the automatic addition of the service charge.
In the case of Caf Blue Bottle, the CCPA ordered the restaurant to refund the full service charge amount to the complainant, immediately stop the practice, and pay a penalty of INR 30,000. For China Gate Restaurant Pvt Ltd, the service charge was refunded during the hearing itself. The authority further directed the restaurant to reconfigure its software-generated billing system to remove any default service charge. A penalty of INR 50,000 was imposed.
The CCPA stated that it is closely monitoring complaints related to service charges and will continue to take strict action against non-compliant restaurants to safeguard consumer rights.
The enforcement follows a March 2025 judgment of the Delhi High Court, which upheld the CCPA's guidelines on service charges. The court ruled that mandatory collection of service charges by hotels and restaurants is contrary to law and confirmed that the CCPA has the authority to enforce its guidelines.
The Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants were issued on July 4, 2022. These guidelines clearly state that no restaurant or hotel can automatically or by default add a service charge to a bill. They also prohibit collecting service charges under any other name.
Further, the guidelines mandate that customers must not be forced to pay a service charge and should be clearly informed that such charges are voluntary and optional. Restaurants are also barred from denying entry or services to customers who refuse to pay a service charge.
With rising consumer awareness and judicial backing, the CCPA's action reinforces compliance requirements for food and hospitality businesses and signals continued regulatory scrutiny of billing practices.
Source: PTI
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