CCPA slaps 27 restaurants for making service charge mandatory, imposes fines up to Rs 50,000
New Delhi, Jan 10: The Central Consumer Protection Authority (CCPA) has taken action against 27 restaurants across India for violating consumer rights by mandatorily levying service charges on food bills, the government said on Saturday.
During investigations, the consumer watchdog found that several restaurants were adding a 10 per cent service charge by default.
Among them were Cafe Blue Bottle in Patna and China Gate Restaurant Private Limited, which operates Bora Bora in Mumbai.
The authority noted that these actions directly violated the law and the CCPA guidelines. Such practices amount to unfair trade practices under the Consumer Protection Act, 2019.
In the case of Cafa Blue Bottle, Patna, the CCPA directed the restaurant to refund the full service charge to the customer, stop the practice immediately, and pay a penalty of Rs 30,000.
In the case of China Gate Restaurant Private Limited in Mumbai, the restaurant refunded the service charge during the hearing.
However, the CCPA imposed a penalty of Rs 50,000 and ordered the restaurant to change its billing software so that service charges are not added automatically. The authority also asked the restaurant to ensure that its official email ID remains active at all times for consumer grievance redressal, as required under the law, according to an official statement.
The action follows a recent judgment of the Delhi High Court dated March 28, 2025, which upheld the CCPA’s guidelines on service charges.
The court clearly stated that restaurants cannot compulsorily collect service charges and must strictly follow the guidelines issued by the consumer watchdog. It also confirmed that the CCPA has full authority to enforce these rules.
According to the CCPA guidelines issued in July 2022, restaurants cannot automatically add a service charge to the bill, cannot collect it under any other name, and cannot force customers to pay it.
Consumers must be clearly told that paying a service charge is voluntary. Restaurants also cannot deny service or restrict entry if a customer refuses to pay the charge. Further, service charges cannot be added to the bill and then taxed with GST.
The action was taken after complaints were received on the National Consumer Helpline, supported by bills showing automatic service charge additions. The CCPA said its investigation confirmed that such practices fall under unfair trade practices.
IANS
