The Central Consumer Protection Authority (CCPA) has taken action against 27 restaurants across India for the mandatory levying of service charges, a practice the authority has declared as an unfair trade practice. The CCPA's actions, announced Saturday, January 10, 2026, follow the guidelines issued by the CCPA and upheld by the Delhi High Court in March 2025, which stated that the mandatory collection of service charges by restaurants is against the law.
The CCPA is the country's top consumer protection authority. It initiated suo motu action after receiving complaints through the National Consumer Helpline (NCH). Investigations revealed that numerous restaurants were automatically adding service charges, often around 10%, to customer bills without their consent. This directly violates the CCPA's guidelines issued in 2022, which stipulate that service charges are voluntary and should not be added by default or subjected to Goods and Services Tax (GST). The guidelines also state that consumers should not be forced to pay a service charge and must be clearly informed that it is voluntary and optional. Restaurants also cannot restrict entry or provision of services based on a refusal to pay the service charge.
The CCPA has the authority to investigate matters of unfair trade practices or violation of consumer rights, allowing it to penalize systemic issues. In response to these violations, the CCPA has imposed penalties up to Rs 50,000 on the violating restaurants. The establishments are also required to refund the service charge amount to affected consumers and modify their billing systems to remove the default addition of service charges.
For example, Café Blue Bottle in Patna was directed to refund the service charge collected from consumers, immediately cease the practice of levying service charges, and pay a penalty of Rs 30,000. China Gate Restaurant Pvt Ltd (Bora Bora) in Mumbai was fined Rs 50,000 and instructed to modify its billing software to remove the default addition of service charges and ensure an active grievance redressal mechanism. In the case of China Gate Restaurant Pvt Ltd (Bora Bora), Mumbai, the restaurant refunded the service charge during the hearing.
The CCPA has stated it will continue to monitor complaints received through the National Consumer Helpline regarding the levy of service charges. The authority has affirmed it will take strict action against non-compliant restaurants to protect consumer interests and prevent unfair trade practices. The CCPA has also directed the restaurants to modify their software-generated billing system to remove the default addition of a service charge or any similar charge. The Ministry of Consumer Affairs has emphasized that the mandatory levy of service charges by restaurants violates consumer law.
