CCPA Takes Action Against 27 Restaurants for Collecting Service Charge from Customers

 New Delhi: The Central Consumer Protection Authority (CCPA) on Saturday said it has taken suo motu action against 27 restaurants for mandatory levying of service charges in violation of the law.

These restaurants have been fined up to Rs 50,000, and were asked to refund the service charge amount to customers and also modify their billing system, as the mandatory levy of service charge has been declared as an unfair trade practice.

The CCPA took action based on consumer complaints on the government helpline number.

According to an official statement by the Department of Consumer Affairs, the CCPA has taken “suo motu cognizance against 27 restaurants located across the country for violation of consumer rights and adoption of unfair trade practices under Section 2(47) of the Consumer Protection Act, 2019, relating to the mandatory levy of service charge”.

Investigations revealed that several restaurants, including Caf Blue Bottle, Patna, and China Gate Restaurant Pvt Ltd (Bora Bora), Mumbai, were automatically levying a 10 per cent service charge by default.

This is a clear violation of the Consumer Protection Act, 2019 and the CCPA Guidelines, which have now been upheld by the High Court of Delhi.

The action was initiated based on complaints received on the National Consumer Helpline (NCH), supported by invoices clearly reflecting the default addition of the service charge.

The CCPA said that a detailed investigation established that such practices amount to Unfair Trade Practice under Section 2(47) of the Act.

In the case of Caf Blue Bottle, Patna, the CCPA directed the restaurant to refund the full amount of the service charge to the consumer. The restaurant was asked to discontinue the practice of levying a service charge with immediate effect and pay a penalty of Rs 30,000.

In the case of China Gate Restaurant Pvt Ltd (Bora Bora), Mumbai, the restaurant refunded the service charge during the hearing.

The CCPA further directed the restaurant to modify its software-generated billing system to remove the default addition of a service charge or any similar charge. The restaurant was told to pay a penalty of Rs 50,000.

The CCPA said 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”.

The action follows the judgment of the High Court of Delhi in March 2025, which upheld the guidelines issued by CCPA on the levy of service charge.

The court held that mandatory collection of service charges by restaurants is contrary to the law and observed that all restaurant establishments are required to adhere to the CCPA guidelines.

The court further said that the CCPA is fully empowered to enforce its guidelines in accordance with the law.

The Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants were issued by the CCPA on July 4, 2022.

The guidelines stipulate that no hotel or restaurant should add a service charge automatically or by default to the food bill.

No service charge shall be collected by any other name, as per the guidelines.

The CCPA guidelines also stipulate that consumers should not be forced to pay a service charge and must be clearly informed that it is voluntary and optional.

No restriction on entry or provision of services should be imposed based on refusal to pay the service charge.