Service charge on restaurant bills illegal if forced, CCPA orders refunds and fines

If you’ve ever been surprised by a service charge quietly added to your restaurant bill, you’re definitely not the only one. The government has now stepped in and made its position clear: restaurants cannot make customers pay a service charge by default.

Acting on a surge in complaints, the Central Consumer Protection Authority has pulled up 27 restaurants across the country for automatically adding these charges. The regulator has called the practice unfair and a breach of consumer rights under the Consumer Protection Act, 2019. The action is also backed by a firm Delhi High Court ruling that says restaurants must follow the rules laid down by the authority.

Complaints on the National Consumer Helpline triggered the action

Add Zee Business as a Preferred Source

The crackdown began after multiple complaints were filed on the National Consumer Helpline (NCH), with customers submitting bills showing service charges being added without consent.

Officials said many diners were either pressured into paying or weren’t informed that the charge was optional. After reviewing the evidence, the CCPA concluded that automatically adding service charges amounts to an unfair trade practice.

Under the CCPA’s 2022 rules, a service charge cannot be treated like a fixed or compulsory fee. Paying it is a choice, not an obligation.

The rules clearly state:

• Service charges must not be added automatically
• Customers cannot be forced or misled into paying
• The bill must mention that it is voluntary
• Refusing to pay cannot lead to denial of service
• GST cannot be applied to such charges if they are not part of the bill

Some restaurants were adding a flat 10 per cent charge without consent

During the investigation, authorities found that several establishments were adding a flat 10 per cent service charge to bills without customer approval.

Among the names flagged were Cafe Blue Bottle in Patna and China Gate Restaurant Pvt Ltd, which operates Bora Bora in Mumbai.

The CCPA said these restaurants were continuing the practice despite clear legal guidelines and even after the High Court’s ruling.

Cafe in Patna was ordered to refund the customer and pay a penalty

In the case of Cafe Blue Bottle, the regulator ordered immediate corrective action.

The restaurant was directed to:

• Refund the full service charge amount
• Stop levying service charges with immediate effect
• Pay a penalty of Rs 30,000

Officials said consumers should not have to argue or negotiate over charges that are not legally mandatory.

Mumbai restaurant was fined Rs 50,000 and told to change its billing system

In Mumbai, Bora Bora refunded the service charge during the hearing, but the CCPA still imposed a strict penalty.

The restaurant has been told to:

• Fix its billing software so service charges aren’t added automatically
• Pay a fine of Rs 50,000
• Keep its complaint email active for consumer grievance support

The authority stressed that billing systems must not be designed to quietly impose extra charges.

Govt says stricter enforcement will continue

The CCPA has said it is keeping a close watch on service charge-related complaints and will continue taking action against restaurants that ignore consumer protection laws.

For diners, the message is simple: a service charge is not compulsory, and you have the right to refuse it.

The government has urged consumers to report violations so unfair practices can be stopped before they become the norm.