Explained: Can restaurants make service charges mandatory? Here's what CCPA says
/ 3 min read
The action follows complaints received through the National Consumer Helpline, where consumers submitted invoices showing that service charges had allegedly been added to their bills automatically.
The CCPA has initiated action against 41 restaurants across the country.
The Central Consumer Protection Authority (CCPA) has started action against 41 restaurants across India for allegedly adding service charges to customers' bills without their explicit consent, calling the practice a violation of consumer rights and an unfair trade practice under the Consumer Protection Act, 2019.
The action follows complaints received through the National Consumer Helpline (NCH), where consumers submitted invoices showing that service charges had allegedly been added to their bills automatically. The consumer watchdog has already passed final orders against several prominent restaurant chains and said proceedings against other establishments are underway.
Why has the CCPA taken action?
According to the Ministry of Consumer Affairs, Food & Public Distribution, the CCPA initiated suo motu proceedings after receiving multiple complaints through the National Consumer Helpline. Consumers alleged that restaurants had added service charges to their bills by default without seeking their consent. After examining the complaints, the authority concluded that automatically levying a service charge deprives consumers of the freedom to decide whether they wish to pay it, making it an unfair trade practice under the Consumer Protection Act, 2019.
Which restaurants are under scrutiny?
The CCPA has initiated action against 41 restaurants across the country. Among the establishments named are Chaayos (Sunshine Teahouse Pvt. Ltd.), Fiesta Barbeque Nation (Barbeque Nation Hospitality Pvt. Ltd.), L'Opera French Bakery Pvt. Ltd., China Gate Restaurant Pvt. Ltd., FOO Ahmedabad Restaurant (Pebble Street Hospitality Pvt. Ltd.), Cafe Blue Bottle in Patna, and Zorro – The Luxury Night Club (Rudra Hospitality Pvt. Ltd.). The authority said investigations and proceedings against other restaurants are continuing.
What did the Delhi High Court rule?
The ministry also referred to the Delhi High Court's judgment dated March 28, 2025, which upheld the validity of the CCPA's guidelines on service charges issued in July 2022. The court ruled that the mandatory collection of service charges is contrary to law and directed restaurants to comply with the regulator's guidelines, reinforcing that consumers cannot be compelled to pay such charges.
What do the CCPA guidelines say?
The CCPA's guidelines, issued on July 4, 2022, make it clear that no hotel or restaurant can automatically or by default add a service charge to a customer's bill. They also prohibit collecting the charge under any other name and require restaurants to clearly inform customers that payment of a service charge is voluntary, optional, and entirely at the consumer's discretion.
The guidelines also state that restaurants cannot deny entry or refuse service to customers who choose not to pay a service charge. In addition, service charges cannot be included in the food bill for the purpose of calculating Goods and Services Tax (GST), and GST cannot be levied on such charges.
What action has been taken against Chaayos?
The CCPA imposed a penalty of ₹50,000 on Sunshine Teahouse Pvt. Ltd., which operates the Chaayos chain, and directed the company to refund the service charge collected from the consumer who filed the complaint. It also ordered the company to modify its software-generated billing system across all its outlets to ensure that service charges, or any similar charges, are not added automatically to customers' bills. The authority further directed the company to ensure that all future bills comply with the consumer protection guidelines.
What can consumers do if a restaurant adds a service charge?
Consumers who find a service charge added to their bill without their consent can first ask the restaurant to remove the charge before making payment. If the issue is not resolved, they can lodge a complaint through the National Consumer Helpline by calling 1915 or 8800001915, or approach the appropriate consumer protection authorities for redressal.
Why does this matter?
The latest crackdown reinforces the CCPA's position that service charges are entirely voluntary and cannot be imposed by default. While customers remain free to reward good service if they choose, restaurants cannot automatically add service charges to bills or pressure diners into paying them. The action is expected to encourage greater transparency in restaurant billing practices and strengthen the enforcement of consumer rights across the hospitality sector.
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