Ziraat Times News Desk
New Delhi, Jan 10: The Central Consumer Protection Authority (CCPA) has taken suo motu action against 27 restaurants across the country for mandatory levy of service charge, holding the practice to be a violation of consumer rights and an unfair trade practice under the Consumer Protection Act, 2019.
The action follows a March 28, 2025 judgment of the Delhi High Court, which upheld the CCPA guidelines on levy of service charge and ruled that compulsory collection of such charges by restaurants is contrary to law. The Court also affirmed that the CCPA is fully empowered to enforce its guidelines.
According to the CCPA, investigations were initiated based on complaints received through the National Consumer Helpline (NCH), supported by invoices showing automatic addition of service charge. The authority found that several establishments were levying a default service charge, usually at the rate of 10 per cent, without consumer consent.
The CCPA reiterated that its 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, clearly state that restaurants cannot add service charge automatically or by default in the bill. The guidelines also prohibit collection of service charge under any other name, bar forcing consumers to pay it, and disallow denial of entry or services for refusal to pay. Service charge, the guidelines add, cannot be added to the bill and subjected to GST.
During the investigation, restaurants such as Café Blue Bottle in Patna and China Gate Restaurant Private Limited (Bora Bora) in Mumbai were found to be in violation of these provisions. In the case of Café Blue Bottle, the CCPA directed the restaurant to refund the full service charge to the complainant, discontinue the practice with immediate effect, and pay a penalty of ₹30,000.
In the case of China Gate Restaurant Private Limited, the service charge was refunded during the hearing. The CCPA further directed the restaurant to modify its software-based billing system to remove the default addition of service charge or any similar levy, pay a penalty of ₹50,000, and ensure that its publicly listed email address remains active for effective consumer grievance redressal.
The CCPA said it is closely monitoring complaints related to service charge received on the National Consumer Helpline and will continue to take strict action against non-compliant restaurants to protect consumer interests and curb unfair trade practices.
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