CCPA Acts Against 41 Restaurants Over Mandatory Service Charges
CCPA has initiated action against 41 restaurants and fined Chaayos over mandatory service charges, citing violations of consumer protection rules.
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The Central Consumer Protection Authority (CCPA) has suo motu actioned against 41 restaurants across the country for allegedly violating consumer rights by automatically adding service charges to customers’ bills without their explicit consent.
The development comes after several complaints were filed with the National Consumer Helpline (NCH) by consumers who presented invoices showing default service charges.
The CCPA after investigation found the practice to be in contravention of its Guidelines on Levy of Service Charge in Hotels and Restaurants and an unfair trade practice under Section 2(47) of the Consumer Protection Act, 2019.
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Service Charge:
The enforcement action follows the Delhi High Court’s order of 28 March 2025, in the case of National Restaurant Association of India & Ors. v. Union of India & Anr., which upheld the service charge guidelines of the CCPA. The Court said restaurants cannot levy compulsory service charges and the regulator has the power to enforce the rules.
Hotels and restaurants cannot automatically add a service charge to food bills or do so under any other name. The charge is voluntary, it must be clearly identified as such and consumers cannot be forced to pay it.
The guidelines also say restaurants cannot refuse entry or services to customers who do not pay a service charge. They also said no GST will be applicable on any voluntary service charge.
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Chaayos Penalised:
In another order, the CCPA imposed a penalty of ₹50,000 on Sunshine Teahouse Pvt. Ltd, which runs the Chaayos café chain, for levying a service charge by default. The authority also directed the company to refund the amount collected from the complainant.
In a wider enforcement push, the CCPA has also moved against other restaurant operators for similar alleged violations, including Cafe Blue Bottle in Patna, Fiesta Barbeque Nation, China Gate Restaurant Pvt. Ltd., FOO Ahmedabad Restaurant, L'Opera French Bakery and Zorro – The Luxury Night Club.
