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 charge on customers’ bills without obtaining their explicit consent.
The action follows complaints received through the National Consumer Helpline (NCH), where consumers submitted invoices showing that service charges had been added to their bills by default. Upon investigation, the CCPA found that the practice violated the Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants, and amounted to an unfair trade practice under Section 2(47) of the Consumer Protection Act, 2019.
The Authority’s action comes in the backdrop of the Delhi High Court’s judgment dated March 28, 2025, in National Restaurant Association of India v. Union of India, 2025:DHC:2084, which upheld the validity of the CCPA’s Service Charge Guidelines. The High Court held that the mandatory collection of service charge is contrary to law and clarified that all restaurant establishments are required to comply with the Guidelines, leaving the CCPA free to enforce them in accordance with law.
The CCPA Guidelines, issued on July 4, 2022, prohibit restaurants and hotels from automatically adding service charge to food bills or collecting it under any other name. They also require establishments to clearly inform consumers that payment of service charge is voluntary, optional, and entirely at the consumer’s discretion, prohibit denial of service to consumers who refuse to pay it, and bar the levy of GST on any such charge.
In one of the cases, the CCPA passed a final order against Chaayos (Sunshine Teahouse Pvt. Ltd.), imposing a ₹50,000 penalty for automatically levying service charge. The Authority also directed the company to refund the service charge collected from the complainant and modify its software-generated billing system across all outlets to ensure that service charge or any similar charge is not added by default.
Final orders have also been passed against Cafe Blue Bottle, Patna; China Gate Restaurant Pvt. Ltd.; Fiesta Barbeque Nation (Barbeque Nation Hospitality Pvt. Ltd.); FOO Ahmedabad Restaurant (Pebble Street Hospitality Pvt. Ltd.); L’Opera French Bakery Pvt. Ltd.; and Zorro – The Luxury Night Club (Rudra Hospitality Pvt. Ltd.).
The CCPA stated that proceedings are continuing against the remaining restaurants where complaints have been received and examined.