CCPA takes action against 27 restaurants for unfair service charges – Firstpost

The Central Consumer Protection Authority (CCPA) has taken suo motu cognizance of 27 restaurants across India for violating consumer rights and engaging in unfair trade practices by automatically levying service charges, in contravention of Section 2(47) of the Consumer Protection Act, 2019.

The move follows a Delhi High Court ruling on 28 March 2025, which upheld CCPA guidelines on service charges in hotels and restaurants. The court noted that mandatory collection of service charges is illegal and affirmed CCPA’s authority to enforce its guidelines.

Under the CCPA Guidelines issued on 4 July 2022:

• No hotel or restaurant can add service charge automatically to the bill.

• Service charges cannot be collected under any other name.

• Consumers must be informed that paying service charges is voluntary.

• Entry or services cannot be denied to those who refuse to pay.

• Service charges cannot be subjected to GST if added to the bill.

Investigations revealed that several establishments, including Café Blue Bottle in Patna and China Gate Restaurant Private Limited (Bora Bora) in Mumbai, were automatically adding a 10% service charge by default, violating both the Consumer Protection Act and CCPA guidelines. Complaints were received via the National Consumer Helpline, supported by invoices showing default service charges.

CCPA directives for the restaurants include:

Café Blue Bottle, Patna:

• Refund the full service charge to consumers

• Immediately stop the automatic levy of service charge

• Pay a penalty of ₹30,000

China Gate Restaurant Pvt. Ltd. (Bora Bora), Mumbai:

• Refund service charges collected during the hearing

• Modify billing software to remove default service charges

• Pay a penalty of Rs 50,000

• Ensure a functional public email ID for consumer grievance redressal

The CCPA stated it will continue to monitor complaints received through the National Consumer Helpline and take strict action against restaurants that violate consumer rights, reinforcing adherence to fair trade practices.

With inputs from agencies