Restaurants across India do not have any legal standing when automatically adding a service charge to your food bill, a new communique from the Union Ministry of Consumer Affairs, Food & Public Distribution revealed.
The Central Consumer Protection Authority (CCPA) has been cracking down on such practices as violations of consumer law. The move came on the heels of a 2025 Delhi High Court judgment upheld CCPA’s guidelines, giving the authority full power to act against non-compliant outlets.
What action has been taken?
The CCPA said it taken suo motu action against 27 restaurants across the country for mandatorily levying service charge and adopting what it calls “unfair trade practices” under the Consumer Protection Act, 2019.
The action was triggered by complaints on the National Consumer Helpline, backed by invoices showing automatic addition of a 10 per cent service charge.
The watchdog’s investigations found that restaurants, including Café Blue Bottle in Patna and China Gate Restaurant Pvt Ltd (Bora Bora) in Mumbai, were adding a service charge by default to bills, the ministry noted. The authority concluded that such practices violate Section 2(47) of the Act, which covers unfair trade practices.
CCPA guidelines
CCPA’s 2022 guidelines clearly state that hotels and restaurants cannot:
- Add a service charge automatically or by default in the bill
- Collect service charge under any other name
- Force consumers to pay a service charge; it must be voluntary and clearly informed
- Deny entry or service if a customer refuses to pay the service charge
- Add a service charge to the bill and then apply GST on it
These guidelines have now been expressly upheld by the Delhi High Court in its March 28, 2025, judgment, which held that mandatory service charge collection is contrary to law.
In the case of Café Blue Bottle, Patna, CCPA ordered a full refund of the service charge to the customer, immediate discontinuation of the practice, and imposed a penalty of Rs 30,000.
For Bora Bora in Mumbai, the restaurant refunded the amount during the hearing but was still directed to change its billing software to remove the default service charge, pay a Rs 50,000 penalty, and keep its public email ID active for grievance redressal.
Both instances were specifically used by the ministry as examples.
The CCPA said it would continue strict action against restaurants that ignore the guidelines and will actively monitor complaints on the National Consumer Helpline.