Dining Out? CCPA Cracks Down on 41 Restaurants Over Mandatory Service Charges; Chaayos Fined ₹50,000

The Central Consumer Protection Authority (CCPA) has launched suo motu action against 41 restaurants across India for allegedly adding service charges to customers' bills without their explicit consent. The move follows multiple consumer complaints received through the National Consumer Helpline (NCH), with supporting bills showing that service charges were automatically included in the final bill.

The consumer watchdog has reiterated that service charges are voluntary and cannot be imposed on diners by default. The action is aimed at protecting consumer rights and curbing unfair trade practices in the hospitality sector.

CCPA Acts Against Restaurants Over Mandatory Service Charges

Consumer Affairs Minister Pralhad Joshi said the CCPA has directed the restaurants concerned to stop automatically levying service charges. According to the authority, customers have the right to decide whether or not to pay a service charge, and restaurants cannot make it mandatory.

The Department of Consumer Affairs stated that the practice violates consumer rights and amounts to an unfair trade practice under the Consumer Protection Act, 2019.

Chaayos Fined, Asked to Refund Customer

In one of the cases, the CCPA imposed a penalty of ₹50,000 on Chaayos (Sunshine Teahouse Pvt. Ltd.) for automatically adding a service charge to a customer's bill.

The authority has also directed the company to refund the service charge collected from the customer and modify its billing software across all outlets to ensure that service charges or similar fees are not added by default.

Other Restaurants Facing Action

The CCPA has also passed final orders against several restaurant establishments, including:

• Cafe Blue Bottle, Patna
• China Gate Restaurant Pvt. Ltd.
• Fiesta Barbeque Nation (Barbeque Nation Hospitality Private Limited)
• FOO Ahmedabad Restaurant (Pebble Street Hospitality Pvt. Ltd.)
• L'Opera French Bakery Private Limited
• Zorro – The Luxury Night Club (Rudra Hospitality Private Limited) 

The department added that proceedings against other restaurants are still underway based on similar complaints.

What Do the Service Charge Rules Say?

Under the 2022 Guidelines on Levy of Service Charge in Hotels and Restaurants, restaurants cannot:

• Add a service charge by default or under any other name.
• Force or pressure customers to pay a service charge.
• Deny entry or service to customers who refuse to pay it.
• Club the service charge with the food bill.
• Levy GST on the service charge. 

The ministry also noted that the Delhi High Court upheld these guidelines last year, reinforcing that mandatory service charges have no legal backing.

Read more: Ethanol May Soon Replace LPG in Some Indian Kitchens; Govt Eyes New Policy by September.

Conclusion

The CCPA's latest enforcement drive serves as a reminder that service charges are entirely optional and must be paid only with the customer's consent. Consumers who find restaurants adding service charges without approval can lodge complaints through the National Consumer Helpline by calling 1915 or using its online grievance portal. The regulator's action is expected to encourage greater transparency in restaurant billing practices and strengthen consumer protection across the country.

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