- CCPA took suo motu action against 27 restaurants for mandatory service charges violations
- Delhi High Court upheld CCPA's 2022 guidelines banning automatic service charge levy
- Guidelines state service charges must be voluntary and not added by default on bills
The Central Consumer Protection Authority has initiated suo motu action against 27 restaurants across India for allegedly violating consumer rights by imposing mandatory service charges. The action comes in the wake of a recent Delhi High Court ruling that upheld the CCPA's 2022 guidelines on service charge collection.
Delhi High Court Upholds CCPA Guidelines
On March 28, 2025, the Delhi High Court affirmed that the mandatory levy of service charge by restaurants is 'contrary to law' and validated the CCPA's authority to enforce its guidelines. The court held that all restaurant establishments must adhere to the Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants, issued on July 4, 2022.
Under these guidelines:
- No hotel or restaurant shall add service charge automatically or by default in the food bill.
- No service charge shall be collected by any other name.
- Consumers shall not be forced to pay service charge and must be clearly informed that it is voluntary and optional.
- No restriction on entry or provision of services shall be imposed based on refusal to pay service charge.
- Service charge shall not be added to the bill and subjected to GST.
Restaurants Flagged for Automatic Levy of Service Charge
During investigation, the CCPA found that several establishments including Café Blue Bottle, Patna, and China Gate Restaurant Pvt. Ltd. (Bora Bora), Mumbai were adding a 10% service charge by default, directly violating the Consumer Protection Act, 2019 and the upheld guidelines.
The crackdown was prompted by complaints lodged on the National Consumer Helpline (NCH), where consumers submitted invoices showing automatic service charge entries. Following verification, the authority concluded that such billing practices amounted to Unfair Trade Practice under Section 2(47) of the Act.
Action Taken Against Café Blue Bottle, Patna and China Gate (Bora Bora), Mumbai
After establishing non‑compliance, the CCPA issued the following directives to Café Blue Bottle:
- Full refund of the service charge to the complainant
- Immediate discontinuation of mandatory service charge
- Penalty of Rs 30,000
During its hearing, China Gate refunded the service charge to the consumer. But the CCPA imposed additional corrective measures:
- Modify its software-based billing system to remove default service charge entries.
- Pay a penalty of Rs 50,000.
- Keep its publicly listed email ID active and functional for consumer grievance redressal, as mandated under the Act.
CCPA to Continue Nationwide Monitoring
The Central Consumer Protection Authority said that it is closely monitoring complaints received on the National Consumer Helpline regarding levy of service charge and will continue to take strict action against non-compliant restaurants to safeguard consumer rights and prevent unfair trade practices.
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