Daijiworld Media Network - New Delhi

New Delhi, Jan 10: The Central Consumer Protection Authority (CCPA) has initiated enforcement action against 27 restaurants across the country for violating consumer rights by compulsorily adding service charges to food bills, the government said on Saturday.

Following detailed investigations, the consumer watchdog found that several establishments were automatically levying a service charge of up to 10 per cent without giving customers a choice. Notable among them were Cafe Blue Bottle in Patna and China Gate Restaurant Private Limited, which operates the Bora Bora restaurant in Mumbai.

The CCPA observed that such practices are in clear violation of existing laws and the authority’s guidelines, and constitute unfair trade practices under the Consumer Protection Act, 2019.

In the case of Cafe Blue Bottle, Patna, the authority ordered the restaurant to refund the entire service charge collected from the complainant, immediately discontinue the practice, and pay a penalty of Rs 30,000.

China Gate Restaurant Private Limited refunded the service charge during the course of the hearing. However, the CCPA still imposed a penalty of Rs 50,000 and directed the restaurant to modify its billing software to ensure that service charges are not added automatically. The authority also instructed the restaurant to keep its official email address functional at all times to facilitate consumer grievance redressal, as mandated by law.

The action comes in the wake of a Delhi High Court judgment dated March 28, 2025, which upheld the CCPA’s service charge guidelines. The court ruled that restaurants cannot impose service charges compulsorily and affirmed the authority’s power to enforce compliance with these rules.

Under the CCPA guidelines issued in July 2022, restaurants are prohibited from automatically adding service charges to bills, collecting them under alternative names, or coercing customers into paying them. Consumers must be clearly informed that payment of a service charge is entirely voluntary.

The guidelines further state that restaurants cannot deny entry, withhold service, or discriminate against customers who refuse to pay a service charge. Additionally, service charges cannot be added to the bill and then subjected to GST.

The enforcement action was triggered by complaints lodged on the National Consumer Helpline, supported by billing evidence showing automatic inclusion of service charges. The CCPA said its investigation confirmed that such practices amount to unfair trade practices and warranted strict action.