CCPA files lawsuits against 27 restaurants for mandatory service charges

The Central Consumer Protection Authority (CCPA) has filed lawsuits against 27 restaurants across India for imposing service charges by default, holding the practice as a violation of consumer rights and the Consumer Protection Act, 2019, unfair trade practice.

The move comes after the Delhi High Court ruling, which was delivered on March 28, 2025, and that upheld the CCPA's order regarding service charges. The court ruled that it was illegal for the eateries to impose service fees mandatorily and accordingly ordered compliance with the guidelines.

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Investigations triggered by consumer complaints

The CCPA investigations that were a consequence of the complaints received through the National Consumer Helpline (NCH) revealed that many restaurants were charging their customers a service fee of about 10 per cent on their bills without asking for their approval. Such practices are in violation of the CCPA 2022 provisions which declare that service fees must be optional and are not subject to taxation.

Café Blue Bottle, Patna was ordered to refund the service charges collected from customers, stop the practice right away, and also face a fine of Rs 30,000. China Gate Restaurant Private Limited (Bora Bora), Mumbai was imposed a fine of Rs 50,000 and was told to change their billing software and keep a complaint redressal system open continuously.

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CCPA guidelines on service charges

The CCPA’s 4 July 2022 guidelines specify:

• No automatic or default service charge in food bills.
• Service charges must not be collected under any other name.
• Payment must be voluntary and clearly communicated.
• No service or entry restrictions based on refusal to pay.
• Service charges must not be added to GST.

Enforcement and penalties

Investigations confirmed that several restaurants, including Café Blue Bottle and China Gate (Bora Bora), violated the Consumer Protection Act, 2019, and CCPA guidelines by automatically adding 10 per cent service charges. The practices were deemed unfair trade practices under Section 2(47) of the Act.