The Central Consumer Protection Authority (CCPA) has initiated decisive enforcement action against 27 restaurants across India for mandatorily levying service charges, holding such practices to be a clear violation of consumer law and an unfair trade practice under the Consumer Protection Act, 2019.
Acting suo motu on the basis of verified consumer complaints, the authority has imposed monetary penalties of up to ₹50,000, ordered refunds to affected consumers, and directed restaurants to overhaul their billing systems to ensure compliance.
The action follows a landmark judgment of the Delhi High Court dated 28 March 2025, which unequivocally upheld the CCPA’s guidelines on the levy of service charge in hotels and restaurants. The Court ruled that mandatory collection of service charge is contrary to law and affirmed that all restaurants are bound to comply with the guidelines issued by the CCPA. Crucially, the Court also confirmed the authority’s statutory power to enforce these guidelines.
The regulatory framework at the heart of the action is the CCPA’s Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants, notified on 4 July 2022.
These guidelines make it explicit that service charge cannot be added automatically or by default to a food bill, cannot be collected under any alternative nomenclature, and cannot be forced upon consumers. Customers must be clearly informed that payment of service charge is voluntary and optional, refusal to pay cannot attract denial of service or entry, and service charge cannot be added to the bill for the purpose of levying GST.
Investigations conducted by the CCPA revealed that several restaurants continued to flout these provisions despite the clarity of the law.
Establishments such as Café Blue Bottle in Patna and China Gate Restaurant Private Limited, which operates the Bora Bora outlet in Mumbai, were found to be automatically adding a 10 per cent service charge to customer bills. Such conduct was held to constitute an unfair trade practice under Section 2(47) of the Consumer Protection Act, 2019.
The enforcement process was triggered by complaints lodged through the National Consumer Helpline (NCH), many of which were supported by invoices that clearly showed the default addition of service charge. A detailed examination of these complaints established a pattern of systematic non-compliance.
In the case of Café Blue Bottle, Patna, the CCPA directed the restaurant to refund the entire service charge collected from the complainant, immediately discontinue the practice of levying service charge, and pay a penalty of ₹30,000. In the matter involving China Gate Restaurant Private Limited (Bora Bora), Mumbai, the restaurant refunded the service charge during the hearing. However, the authority went further, directing the company to modify its software-based billing system to eliminate the automatic addition of service charge or any similar levy.
It also imposed a penalty of ₹50,000 and instructed the restaurant to ensure that its publicly listed email ID remains active and functional at all times, in line with statutory requirements for consumer grievance redressal.
The CCPA has made it clear that enforcement will continue with zero tolerance for violations. Complaints received on the National Consumer Helpline are being closely monitored, and restaurants found to be imposing mandatory service charges will face strict regulatory action. The authority has reiterated that consumer choice is central to the law, and any attempt to disguise compulsory charges as optional or customary will invite penalties.
This action sends an unambiguous message to the hospitality sector: transparency in billing is not optional, and consumer rights cannot be diluted by default practices embedded in menus or billing software.
