Consumer protection authority initiates suo motu action against 41 restaurants for levying service charge by default

New Delhi [India], July 19 (ANI): The Central Consumer Protection Authority (CCPA) has initiated suo motu action against 41 restaurants across the country for allegedly levying service charge by default on consumers' bills, following complaints received through the National Consumer Helpline (NCH), according to a Ministry of Consumer Affairs, Food and Public Distribution release issued on Sunday.

The ministry said the action was taken after consumers submitted complaints supported by invoices showing that "service charge had been automatically added to consumers' bills without obtaining their explicit consent."

"CCPA has initiated suo motu action against 41 restaurants across the country for violation of consumer rights and adoption of unfair trade practices by levying service charge by default on consumers' bills," the release said.

According to the ministry, investigations found that the automatic levy of service charge violated the Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants and amounted to an unfair trade practice under the Consumer Protection Act, 2019.

The release noted that the Delhi High Court, in its March 28, 2025 judgment, upheld the validity of the CCPA's service charge guidelines and held that "mandatory collection of service charge is contrary to law," adding that restaurants are required to comply with the guidelines.

The ministry reiterated that the guidelines prohibit hotels and restaurants from adding service charge automatically or by default to food bills. It also said consumers cannot be forced to pay service charge, which must be "voluntary, optional and entirely at the consumer's discretion."

As part of its enforcement action, the CCPA has passed a final order against Chaayos (Sunshine Teahouse Pvt. Ltd.), imposing a penalty of Rs 50,000 for levying service charge by default and directing the company to reimburse the amount collected from the consumer. It has also been directed to modify its software-generated billing system across all outlets to ensure service charge is not added automatically. the ministry stated.

The ministry said final orders have also been passed against Cafe Blue Bottle, Patna; China Gate Restaurant Pvt. Ltd.; Fiesta Barbeque Nation; FOO Ahmedabad Restaurant; L'Opera French Bakery Private Limited; and Zorro - The Luxury Night Club. Proceedings against other restaurants are underway.

The CCPA has urged consumers to report instances of default service charge through the National Consumer Helpline, saying it will continue to take action against establishments found violating the Consumer Protection Act, 2019, and the service charge guidelines. (ANI)

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