The Central Consumer Protection Authority (CCPA) has launched action against 41 restaurants across India for allegedly imposing service charges on customers’ bills without their consent. The move follows complaints received through the National Consumer Helpline (NCH), where consumers submitted invoices showing that service charges had been added automatically to their bills.
Union Consumer Affairs Minister Pralhad Joshi said the action demonstrates the government’s commitment to protecting consumer rights. He reiterated that paying a service charge is entirely voluntary and should remain at the customer’s discretion. According to the minister, restaurants cannot make service charges mandatory or include them by default in bills.
The CCPA has directed restaurants found violating consumer protection rules to stop automatically adding service charges and has also imposed penalties in appropriate cases.
Investigation Finds Violation of Consumer Protection Rules
Following the complaints, the CCPA carried out investigations into the billing practices of the restaurants concerned. The authority concluded that adding service charges without obtaining explicit customer consent violates the “Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants.”
The authority also determined that such billing practices amount to an unfair trade practice under Section 2(47) of the Consumer Protection Act, 2019. According to the Act, businesses cannot adopt misleading or unfair methods that negatively affect consumers or restrict their freedom of choice.
Officials stated that restaurants must clearly inform customers that service charges are optional and cannot be presented as compulsory payments.
Delhi High Court Backed CCPA Guidelines
The CCPA’s enforcement action comes after a significant legal development. In its judgment delivered on March 28, 2025, the Delhi High Court upheld the validity of the CCPA’s service charge guidelines in the case of National Restaurant Association of India & Others vs Union of India & Another.
The court ruled that the mandatory collection of service charges is not permissible under the law and affirmed that restaurants are required to comply with the guidelines issued by the consumer protection authority. The judgment also made it clear that the CCPA is empowered to enforce these guidelines and initiate action against establishments that fail to follow them.
The ruling strengthened the authority’s ability to ensure transparency in restaurant billing and protect consumer interests across the country.
What the Service Charge Guidelines Say
The CCPA issued its guidelines on July 4, 2022, to prevent unfair trade practices relating to service charges in hotels and restaurants.
Under these guidelines, restaurants are prohibited from automatically adding service charges to food bills. They are also not allowed to collect such charges under any alternative name.
The guidelines further state that customers cannot be compelled to pay service charges and must be informed that such payments are completely voluntary. Restaurants are also barred from refusing entry or denying services to customers who choose not to pay a service charge.
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Additionally, service charges should not be included in the taxable value of food bills, meaning Goods and Services Tax (GST) should not be levied on such charges.
Penalty Imposed on Chaayos, Other Restaurants Face Action
In one of the cases investigated by the CCPA, the authority passed a final order against Chaayos, operated by Sunshine Teahouse Pvt. Ltd. The company has been fined ₹50,000 for automatically levying a service charge on a consumer’s bill.
Apart from imposing the monetary penalty, the CCPA directed the company to refund the service charge collected from the customer. It also instructed Chaayos to modify its software-generated billing system across all its outlets to ensure that service charges or similar fees are not added automatically in future bills.
Final orders have also been issued against several other restaurant establishments, including Cafe Blue Bottle in Patna, China Gate Restaurant Pvt. Ltd., Barbeque Nation Hospitality Pvt. Ltd., FOO Ahmedabad Restaurant, L’Opera French Bakery Private Limited and Zorro – The Luxury Night Club.
The authority stated that investigations and proceedings are continuing against other restaurants where similar complaints have been received.
Consumers Encouraged to Report Violations
The CCPA has urged consumers to report any restaurant that automatically adds service charges without consent. Complaints can be filed through the National Consumer Helpline by calling the toll-free number 1915 or by using the NCH platform.
Union Minister Pralhad Joshi emphasized that consumers have the right to decide whether they wish to pay a service charge. He said the government remains committed to ensuring fair, transparent and consumer-friendly business practices in the hospitality sector.
The CCPA has also made it clear that it will continue monitoring complaints related to service charges and will take strict action against restaurants found violating the Consumer Protection Act, 2019, and the existing service charge guidelines. The authority believes that stronger enforcement will help safeguard consumer rights while promoting greater transparency in restaurant billing across India.
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