CCPA cracks down on restaurants adding service charge by default, begins action against 41 establishments
The move reinforces consumers' right to refuse voluntary charges and signals stricter enforcement of consumer protection laws.
The enforcement drive comes after the Delhi High Court, in its judgment dated March 28, 2025, upheld the validity of the CCPA's service charge guidelines in the case of National Restaurant Association of India & Others vs Union of India & Another.
NEW DELHI: The Central Consumer Protection Authority (CCPA) has initiated suo motu action against 41 restaurants across the country for allegedly violating consumer rights by automatically levying service charges on food bills without obtaining customers’ explicit consent.
The action follows complaints received through the National Consumer Helpline (NCH), where consumers submitted invoices showing service charges had been added by default. Based on its investigation, the CCPA concluded that the practice violates the Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants and constitutes an unfair trade practice under Section 2(47) of the Consumer Protection Act, 2019.
The enforcement drive comes after the Delhi High Court, in its judgment dated March 28, 2025, upheld the validity of the CCPA’s service charge guidelines in the case of National Restaurant Association of India & Others vs Union of India & Another. The court ruled that mandatory collection of service charge is contrary to law and affirmed the CCPA’s authority to enforce the guidelines against violators.
The guidelines, issued on July 4, 2022, prohibit hotels and restaurants from adding service charges automatically or under any other name. They also make it clear that payment of service charge is entirely voluntary and at the customer’s discretion. Restaurants cannot deny service, restrict entry or impose any penalty on consumers who choose not to pay the charge. Additionally, GST cannot be levied on any voluntarily paid service charge.
In one of the cases, the CCPA imposed a penalty of ₹50,000 on Chaayos, operated by Sunshine Teahouse Pvt. Ltd., for automatically adding service charge to customers’ bills. The authority directed the company to refund the collected amount to the complainant and modify its software-generated billing system across all outlets to ensure that service charges are never added by default.
The CCPA has also passed final orders against several other restaurant chains and hospitality establishments, including Cafe Blue Bottle in Patna, China Gate Restaurant Pvt. Ltd., Barbeque Nation Hospitality Pvt. Ltd., FOO Ahmedabad Restaurant, L’Opera French Bakery Private Limited, and Zorro – The Luxury Night Club, among others.
The authority said proceedings are continuing against other restaurants where similar complaints have been received. Consumers who encounter automatic service charges can lodge complaints through the National Consumer Helpline by calling the toll-free number 1915 or using the NCH online platform.
The latest enforcement action signals the government’s intent to strengthen consumer rights in the hospitality sector and ensure that restaurants comply with the law by treating service charges as a voluntary payment rather than a mandatory component of the bill.
