The Central Consumer Protection Authority (CCPA) has initiated suo motu action against 41 restaurants across India for allegedly violating consumer rights by automatically levying service charges on customers’ bills without their explicit consent.
The action follows multiple complaints received through the National Consumer Helpline (NCH), with consumers submitting invoices showing that service charges had been added by default despite not agreeing to pay them.
Following an investigation, the consumer watchdog concluded that the practice violates its guidelines on service charges and constitutes an unfair trade practice under the Consumer Protection Act, 2019.
Delhi High Court backs CCPA guidelines
The CCPA said its action is supported by the Delhi High Court’s judgment dated March 28, 2025, in the case of National Restaurant Association of India & Others vs Union of India & Another.
The court upheld the validity of the CCPA’s 2022 guidelines on service charges and ruled that the mandatory collection of service charges is contrary to law.
It also clarified that all restaurants must comply with the guidelines and that the CCPA is empowered to enforce them.
What the guidelines say
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, clearly state that:
- Hotels and restaurants cannot automatically or by default add a service charge to food bills.
- Service charge cannot be collected under any other name.
- Consumers cannot be compelled to pay a service charge, which must remain voluntary and entirely at the customer’s discretion.
- Restaurants cannot deny entry or services to customers who refuse to pay a service charge.
- Service charges cannot be included in the food bill for the purpose of levying GST.
Penalty imposed on Chaayos
In one of the cases, the CCPA passed a final order against Chaayos (Sunshine Teahouse Pvt. Ltd.), imposing a penalty of ₹50,000 for automatically levying a 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 charges or similar fees are not added automatically to customer bills.
Other restaurants face action
The CCPA has also passed final orders against several other restaurant establishments, including:
- 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.
- Zorro – The Luxury Night Club (a unit of Rudra Hospitality Pvt. Ltd.)
- Chaayos (Sunshine Teahouse Pvt. Ltd.)
The authority said proceedings are continuing against other restaurants where similar complaints have been received and examined.
The latest action underscores the CCPA’s resolve to enforce consumer protection laws and ensure that restaurants do not impose hidden or mandatory charges in violation of customer rights.