The Central Consumer Protection Authority (CCPA) has initiated suo motu action against 41 restaurants across India for violating consumer rights and engaging in unfair trade practices by automatically levying service charges on consumer bills without obtaining explicit consent. This enforcement action was triggered by complaints received through the National Consumer Helpline (NCH), supported by invoices demonstrating the automatic addition of service charges.
Investigations by CCPA found that this practice violates 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 4 July 2022. The Authority determined that automatic service charge levying constitutes an unfair trade practice under Section 2(47) of the Consumer Protection Act, 2019. The Delhi High Court's judgment dated 28 March 2025 in National Restaurant Association of India & Ors. v. Union of India & Anr. upheld the validity of these guidelines and clarified that mandatory service charge collection is illegal, requiring all restaurants to comply.
The guidelines specifically prohibit: adding service charge automatically or by default in food bills; collecting service charge under any other name; forcing consumers to pay service charge; imposing entry restrictions for non-payment; and levying GST on service charge amounts. Restaurants must clearly inform consumers that service charge is voluntary, optional, and entirely at the consumer's discretion.
In one concluded case, CCPA imposed a ₹50,000 penalty on Chaayos (Sunshine Teahouse Pvt. Ltd.) for default service charge levying and directed the company to reimburse the collected amount to the affected consumer. The company was also ordered to modify its software-generated billing system across all outlets to prevent automatic addition of service charge or similar charges. Final orders have also been issued against Cafe Blue Bottle (Patna), China Gate Restaurant Pvt. Ltd., Fiesta Barbeque Nation (Barbeque Nation Hospitality Private Limited), FOO Ahmedabad Restaurant (Pebble Street Hospitality Pvt. Ltd.), L'Opera French Bakery Private Limited, and Zorro – The Luxury Night Club (Rudra Hospitality Private Limited).
Proceedings continue against other restaurants where complaints have been received and examined. Consumers can report violations by calling the National Consumer Helpline at 1915 (toll-free) or through the NCH platform. CCPA remains committed to monitoring service charge complaints and taking appropriate action against establishments violating consumer protection regulations.