Service charge row: CCPA cracks down on 27 restaurants for mandatory levy; refunds, penalties ordered

The Central Consumer Protection Authority (CCPA) on Saturday said it has taken suo motu action against 27 restaurants across the country for mandatorily levying service charges on customers, holding the practice to be a violation of consumer law.The restaurants have been fined up to Rs 50,000, directed to refund the service charge collected from consumers, and asked to modify their billing systems to remove any default addition of such charges, the authority said.According to the Department of Consumer Affairs, the CCPA took “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”.The action followed complaints received on the National Consumer Helpline (NCH), supported by invoices showing that a 10 per cent service charge was being added automatically to bills.Investigations found that several establishments, including Café Blue Bottle, Patna, and China Gate Restaurant Pvt Ltd (Bora Bora), Mumbai, were levying service charges by default — a practice declared an unfair trade practice under the Consumer Protection Act, 2019, and barred under CCPA guidelines.In the case of Café Blue Bottle, Patna, the CCPA directed the restaurant to refund the entire service charge collected from the complainant, discontinue the practice 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. It was further directed to modify its software-generated billing system to remove the default levy and 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 comes after the Delhi High Court’s March 2025 ruling, which upheld the CCPA’s guidelines on service charges and held that mandatory collection of service charge by restaurants is contrary to law. The court also affirmed that the CCPA is fully empowered to enforce its guidelines.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 restaurants cannot add a service charge automatically or by default, cannot collect it under any other name, and cannot force consumers to pay it. The guidelines also bar restaurants from denying entry or service to customers who refuse to pay a service charge.