CCPA cracks down on 41 restaurants over default service charge: What do guidelines say?

The Central Consumer Protection Authority (CCPA) has initiated suo motu action against 41 restaurants across the country for allegedly levying service charge by default on consumers' bills, saying the practice violates consumer rights and amounts to an unfair trade practice.

The action follows complaints received through the National Consumer Helpline (NCH), supported by invoices showing that service charge had been automatically added to bills without obtaining consumers' explicit consent.

Following an investigation, the authority found that the automatic levy of service charge violated its 2022 guidelines on service charges and amounted to an unfair trade practice under the Consumer Protection Act, 2019.

What did the Delhi HC rule?

The action follows a March 2025 ruling by the Delhi High Court, which upheld the validity of the CCPA's guidelines and held that mandatory collection of service charges by restaurants was contrary to law.

The court had also clarified that all restaurant establishments are required to comply with the guidelines and that the CCPA is free to enforce them in accordance with law.

What do CCPA's guidelines say?

The guidelines, issued on July 4, 2022, state that no hotel or restaurant shall add service charge automatically or by default in the food bill. They also prohibit collection of service charge under any other name.

The guidelines further provide that consumers cannot be forced to pay service charge and must be clearly informed that it is "voluntary, optional and entirely at the consumer's discretion".

Restaurants are also barred from restricting entry or denying services to customers for refusing to pay service charge.

They also stipulate that service charge should not be added to the food bill and GST should not be levied on such amount.

Which restaurants have faced action?

In one case, the CCPA has passed a final order against Chaayos (Sunshine Teahouse Pvt. Ltd.), imposing a penalty of ₹50,000 for levying service charge by default and directing the company to reimburse the amount collected from the consumer.

The authority also directed the company to modify its software-generated billing system across all its outlets to ensure that service charge or any similar charge is not added automatically to consumers' bills.

The authority said it had also passed final orders against Cafe Blue Bottle in Patna, China Gate Restaurant Pvt. Ltd., Fiesta Barbeque Nation, FOO Ahmedabad Restaurant, L'Opera French Bakery Private Limited and Zorro – The Luxury Night Club.