The Central Consumer Protection Authority (CCPA) has cracked down on 27 restaurants in India for breaching consumer rights by imposing compulsory service charges on food bills. These eateries, including Cafe Blue Bottle in Patna and China Gate Restaurant Private Limited in Mumbai, were found to be adding a default 10 per cent service charge during investigations. The CCPA emphasized that such actions violated both the law and its guidelines, constituting unfair trade practices under the Consumer Protection Act, 2019.
In response to these violations, CCPA directed Cafe Blue Bottle in Patna to refund the full service charge to customers, cease the practice immediately, and pay a penalty of Rs 30,000. Similarly, China Gate Restaurant Private Limited in Mumbai refunded the service charge during the hearing but was still fined Rs 50,000. The restaurant was also instructed to modify its billing software to prevent automatic service charge additions and ensure an active official email ID for consumer grievance redressal, as mandated by law.
The recent judgment of the Delhi High Court dated March 28, 2025, upheld CCPA’s guidelines on service charges, affirming that restaurants cannot enforce mandatory service charge collections. The court emphasized the need for strict adherence to the consumer watchdog’s directives and confirmed CCPA’s authority to enforce these regulations. According to CCPA’s guidelines from July 2022, restaurants are prohibited from automatically including service charges on bills, naming them differently, or compelling customers to pay. Customers must be informed that paying a service charge is voluntary, and refusal to pay cannot result in denial of service or entry restrictions. Additionally, service charges should not be taxed with GST after being added to the bill.
The crackdown on these restaurants followed complaints lodged on the National Consumer Helpline, supported by bills demonstrating automatic service charge inclusions. CCPA’s investigation validated these complaints, categorizing such practices as unfair trade practices.
