Date: 2026-07-19Category: Press ReleaseState: Union GovernmentCountry: India
CCPA initiates suo motu action against 41 restaurants for levying service charge by default; action based on consumer complaints received through National Consumer Helpline
**Executive Summary**
The Central Consumer Protection Authority (CCPA) has initiated *suo motu* action against 41 restaurants for levying service charges by default, a practice classified as an unfair trade practice. Following a March 2025 Delhi High Court judgment upholding the CCPA's guidelines, the authority has issued penalties and orders for reimbursement. Consumers are encouraged to report ongoing violations via the National Consumer Helpline (1915).
**Key Points / Main Content**
* **Legal Framework and Violations**
* The CCPA identified the automatic levy of service charges as a violation of consumer rights and an "unfair trade practice" under Section 2(47) of the Consumer Protection Act, 2019.
* A Delhi High Court judgment dated March 28, 2025, reaffirmed that mandatory collection of service charges is contrary to law and that all restaurants must comply with CCPA guidelines.
* **Prohibited Practices under CCPA Guidelines**
* Hotels and restaurants are strictly prohibited from adding service charges automatically or by default to food bills.
* Service charges cannot be collected under any alternative name.
* Establishments must clearly inform consumers that service charges are entirely voluntary and at their discretion.
* No consumer can be denied entry or service for refusing to pay a service charge.
* GST must not be levied on service charge amounts.
* **Enforcement and Penalties**
* Chaayos (Sunshine Teahouse Pvt. Ltd.) was fined ₹50,000 and ordered to reimburse collected service charges to consumers.
* Final orders have been passed against several establishments, including Cafe Blue Bottle, China Gate Restaurant, Barbeque Nation, FOO Ahmedabad, L'Opera, and Zorro.
* Non-compliant restaurants are being directed to modify their software-generated billing systems to remove automatic charge additions.
**Impact Analysis**
**Stakeholder: Restaurant and Hotel Establishments**
**Impact**
Establishments face legal proceedings, financial penalties, and the requirement to modify their revenue and billing infrastructure. The inability to levy mandatory charges may impact service-related revenue streams.
**Action Required**
Immediately cease the automatic addition of service charges, update billing software to ensure charges are manual/optional, and train staff to inform consumers that the charge is voluntary.
**Stakeholder: Consumers**
**Impact**
Consumers are protected from unauthorized charges and have the legal right to decide whether to pay for service. They are empowered to seek reimbursements for illegally collected fees.
**Action Required**
Review food bills for default service charges and report violations to the National Consumer Helpline by calling 1915 or using the NCH digital platform.
**Stakeholder: Central Consumer Protection Authority (CCPA)**
**Impact**
The authority is actively enforcing consumer protection laws and monitoring the hospitality sector to ensure transparent business practices.
**Action Required**
Continue *suo motu* investigations, process complaints received via the National Consumer Helpline, and issue final orders against violating entities.
Key Entities Referenced
Central Consumer Protection Authority (CCPA): The regulatory body that initiated suo motu action and passed orders against restaurants for the illegal levy of service charges.
Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants: The specific policy document issued on July 4, 2022, which prohibits hotels and restaurants from automatically adding service charges to food bills.
Consumer Protection Act, 2019: The primary legislation under which the CCPA operates and classifies the mandatory levy of service charges as an unfair trade practice.
National Consumer Helpline (NCH): The government platform through which consumer complaints were received, triggering the regulatory investigations and enforcement actions.
High Court of Delhi: The judicial authority that upheld the validity of the CCPA's service charge guidelines in its March 2025 judgment.
Ministry of Consumer Affairs, Food & Public Distribution
CCPA initiates suo motu action against 41
restaurants for levying service charge by default;
action based on consumer complaints received
through National Consumer Helpline
Action follows complaints supported by bills showing service
charge was added without consumers' explicit consent
Posted On: 19 JUL 2026 5:42PM by PIB Delhi
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 action has been taken based on complaints received through the National Consumer Helpline (NC
H). The complaints were supported by invoices showing that service charge had been automatically added
to consumers' bills without obtaining their explicit consent.
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.
The Hon'ble High Court of Delhi, in its judgment dated 28 March 2025 in National Restaurant Associat
ion of India & Ors. v. Union of India & Anr., upheld the validity of the CCPA's Guidelines on Service
Charge and held that mandatory collection of service charge is contrary to law. The Court further clarified
that all restaurant establishments are required to comply with the Guidelines and that CCPA is free to
enforce them in accordance with law.
Key provisions of the CCPA Guidelines
The Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to
Levy of Service Charge in Hotels and Restaurants, issued on 4 July 2022, provide that:
No hotel or restaurant shall add service charge automatically or by default in the food bill.
No collection of service charge shall be done by any other name.
No hotel or restaurant shall force a consumer to pay service charge and must clearly inform consumers
that it is voluntary, optional and entirely at the consumer's discretion.
No restriction on entry or provision of services shall be imposed on consumers for not paying service
charge.
Service charge shall not be added to the food bill and GST shall not be levied on such amount.Action taken by CCPA
In one such case, CCPA passed a final order against Chaayos (Sunshine Teahouse Pvt. Ltd.), imposing a
penalty of ₹50,000 for levying service charge by default and directing the company to reimburse the
service charge collected from the consumer.
The company has also been directed to modify its software-generated billing system across all its outlets
to ensure that service charge or any similar charge is not added automatically to consumers' bills. CCPA
has also passed final orders against the following restaurant establishments:
1. Cafe Blue Bottle, Patna
2. China Gate Restaurant Pvt. Ltd.
3. Fiesta Barbeque Nation (Barbeque Nation Hospitality Private Limited)
4. FOO Ahmedabad Restaurant (Pebble Street Hospitality Pvt. Ltd.)
5. L'Opera French Bakery Private Limited
6. Zorro – The Luxury Night Club (a unit of Rudra Hospitality Private Limited)
7. Chaayos (Sunshine Teahouse Pvt. Ltd.)
Further proceedings are underway against other restaurants where complaints have been received and
examined.
The Central Consumer Protection Authority (CCPA) has initiated suo motu action
against 41 restaurants for levying service charge by default, based on complaints
received through the National Consumer Helpline (NCH).
Reaffirming that service charge is voluntary and entirely at… pic.twitter.com/bES
SxvTX4U
— Pralhad Joshi (@JoshiPralhad) July 19, 2026
Consumers can report violation
CCPA encourages consumers to report instances where restaurants levy service charge by default through
the National Consumer Helpline by calling 1915 (toll-free) or through the NCH platform. 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. CCPA remains committed to safeguarding consumer rights and ensuring fair,
transparent and consumer-friendly business practices across the hospitality sector.
***
RT/ ARC
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