CCPA Initiates Action Against Restaurants Over Service Charge
The Central Consumer Protection Authority (CCPA) has taken suo motu action against 41 restaurants nationwide, including Chaayos and Barbeque Nation, for purportedly infringing consumer rights by automatically imposing service charges on customers' bills.
The measure follows complaints made by consumers through the National Consumer Helpline (NCH), backed by invoices indicating that service charges were automatically included in their bills without their explicit consent.
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The statement indicated that the CCPA probed the complaints and determined that the practice breached the Guidelines to Prevent Unfair Trade Practices and Consumer Interest Protection concerning Service Charge Imposition in Hotels and Restaurants.
“The Central Consumer Protection Authority (CCPA) has initiated suo motu action against 41 restaurants across the country for violation of consumer rights and adoption of unfair trade practices by levying service charge by default on consumers’ bills," the Ministry of Consumer Affairs, Food & Public Distribution.
The authority determined that the automatic inclusion of service fees constitutes an unfair trade practice as defined in Section 2(47) of the Consumer Protection Act, 2019.
“Based on these complaints, CCPA conducted investigations and found that the automatic levy of service charge violated 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 found that such practice amounts to an unfair trade practice under Section 2(47) of the Consumer Protection Act, 2019," it adds.
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The ministry stated that the Delhi High Court, in its ruling on March 28, 2025, in National Restaurant Association of India & Others vs Union of India & Another, confirmed the legitimacy of the CCPA’s service charge guidelines.
The court determined that the compulsory collection of service charges is illegal and specified that all restaurants must adhere to the regulations. It was also noted that the CCPA can enforce the guidelines as permitted by law.
The regulations, released on July 4, 2022, explicitly specify that hotels and restaurants must not automatically include service charges on food bills.
They additionally forbid collecting service fees under any different name and clarify that consumers cannot be compelled to pay those fees. Establishments must notify patrons that the payment of a service charge is voluntary, optional, and completely at the customer’s choice. The regulations also indicate that establishments cannot bar entry or reject service to patrons who choose not to pay service fees. They also ban adding service charges to food bills in a way that causes GST to be applied to the total.
The CCPA announced it has issued a final order against Chaayos (Sunshine Teahouse Pvt. Ltd.), imposing a fine of Rs 50,000 for automatically charging a service fee. The agency has instructed the firm to refund the service fees charged to the customer and adjust its software-based billing system in all locations to guarantee that service fees or comparable charges are not automatically included in customers’ invoices.
In addition to Chaayos, the CCPA has issued final orders against multiple restaurant entities, such as Cafe Blue Bottle in Patna; China Gate Restaurant Pvt. Ltd.; Fiesta Barbeque Nation (Barbeque Nation Hospitality Private Limited); FOO Ahmedabad Restaurant (Pebble Street Hospitality Pvt. Ltd.); L’Opera French Bakery Private Limited; and Zorro – The Luxury Night Club, operated by Rudra Hospitality Private Limited.
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The agency stated that actions are ongoing against additional restaurants where grievances have been submitted and reviewed. The CCPA has prompted consumers to notify cases where restaurants impose service charges automatically by calling the toll-free number 1915 or using the NCH platform.
The ministry said the authority “continues to closely monitor complaints relating to service charge and will take appropriate action against establishments found to be violating the Consumer Protection Act, 2019 and the Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants."
It added that the CCPA “remains committed to safeguarding consumer rights and ensuring fair, transparent and consumer-friendly business practices across the hospitality sector."