CCPA Cracks Down on 27 Restaurants Over Illegal Service Charge Collection

Surat | Gujarat — The Central Consumer Protection Authority (CCPA) has taken suo motu cognizance against 27 restaurants across the country for violating consumer rights and adopting unfair trade practices under Section 2(47) of the Consumer Protection Act, 2019, relating to mandatory collection of service charge. Action has been taken based on complaints received from consumers along with invoices (bills) on the National Consumer Helpline (NCH).

The action follows the Delhi High Court’s March 28, 2025 judgment, which upheld the guidelines issued by the CCPA on the levy of service charge. The court held that the mandatory levy of service charge by restaurants is against the law and observed that all restaurant establishments must comply with the CCPA guidelines. The court further confirmed that the CCPA has full powers to enforce its guidelines in accordance with the law.

The guidelines issued by the CCPA on July 4, 2022 to prevent unfair trade practices related to the collection of service charge in hotels and restaurants and to protect consumer interests, provide that, “No hotel or restaurant shall automatically or by default add service charge to the food bill.

Service charge shall not be levied in any other name. Customers shall not be compelled to pay service charge and shall be clearly informed that it is voluntary and optional.

No restriction shall be imposed on entry or provision of services for refusal to pay service charge.

In the case of Cafe Blue Bottle, the CCPA has directed the restaurant to refund the full amount of service charge to the customer. To immediately cease the practice of collecting service charge. To pay a penalty of Rs. 30,000.

In the case of China Gate Restaurant Private Limited (Bora Bora), Mumbai, the restaurant had refunded the service charge during the hearing. The CCPA has further directed the restaurant to “return the service charge or any other similar To modify its software-generated billing system to remove default addition of charges. To pay a fine of Rs. 50,000 for violation of consumer rights and unfair trade practices.

To ensure that its email ID available on public platforms remains active at all times for redressal of consumer grievances, The Central Consumer Protection Authority is closely monitoring the complaints received on the National Consumer Helpline regarding levy of service charges and will continue to take strict action against restaurants engaging in such practices to protect consumer rights.

An investigation by the National Consumer Helpline (NCH) has revealed that several restaurants, including Café Blue Bottle in Patna and China Gate Restaurant Private Limited (Bora Bora) in Mumbai, were charging 10% service charge by default, which is a clear violation of the Consumer Protection Act, 2019 and CCPA guidelines.

The action was initiated on the basis of complaints received at the National Consumer Helpline (NCH) and invoices (bills) produced with it, which clearly showed the default addition of service charge. A detailed investigation proved that such practices amounted to unfair trade practices under Section 2(47) of the Act.