CCPA Cracks Down on 41 Restaurants for Service Charge Violations
The Central Consumer Protection Authority (CCPA) has taken decisive action against 41 restaurants nationwide for violating consumer rights by automatically adding service charges to bills. This move follows numerous complaints from consumers received through the National Consumer Helpline (NCH), which highlighted that many establishments were levying service charges without obtaining explicit consent from customers.
Upon investigation, the CCPA discovered that the practice of automatically adding service charges contravenes guidelines issued to prevent unfair trade practices aimed at protecting consumers. This action is critical as it upholds the principle established under the Consumer Protection Act, 2019, deeming such practices as unfair trade.
Legal Backing for Consumer Rights
A significant ruling on this matter came from the Delhi High Court on March 28, 2025, in the case of National Restaurant Association of India & Ors. v. Union of India & Anr. The Court affirmed the legitimacy of the CCPA’s guidelines concerning service charges while stating that mandatory service charge collections are unlawful. It issued directives to all restaurant establishments to strictly comply with these guidelines.
Guidelines to Combat Unfair Practices
Established on July 4, 2022, the CCPA’s guidelines mandate that:
- Restaurants cannot add service charges by default to bills.
- Service charges must not be referred to by any alternative name.
- Consumers cannot be coerced into paying service charges; they must be clearly informed that it is optional.
- No restrictions on service provision or entry shall be imposed for not paying a service charge.
- Service charges cannot be included in food bills, nor can GST be applied to them.
Consequences for Violators
The CCPA has already imposed penalties on several restaurant establishments. For instance, Chaayos (operated by Sunshine Teahouse Pvt. Ltd.) faced a ₹50,000 fine for charging service fees automatically. Furthermore, they were instructed to amend their billing systems to ensure no service charge is included by default.
Other establishments penalized include Cafe Blue Bottle in Patna, China Gate Restaurant Pvt. Ltd., and Barbeque Nation Hospitality Private Limited, among others. CCPA is also examining complaints against additional restaurants to enforce compliance with consumer protection laws.
Empowering Consumers
The CCPA urges consumers to report any instances of automatic service charges through the National Consumer Helpline by calling 1915, which is toll-free. By remaining vigilant and encouraging public involvement, the CCPA aims to protect consumer rights and foster a fairer, more transparent hospitality industry.
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