Consumer watchdog orders refunds, fines violators, and warns of stricter action following Delhi High Court ruling
The Central Consumer Protection Authority (CCPA), the country’s apex consumer watchdog under the Ministry of Consumer Affairs, has initiated suo motu proceedings against 27 restaurants across India for imposing mandatory service charges, despite explicit guidelines barring the practice.
In a statement, the authority said the automatic addition of a service charge has been declared an unfair trade practice and attracts penalties under the Consumer Protection Act, 2019. The action has been taken under Section 2(47) of the Act, citing violation of consumer rights and the adoption of unfair trade practices by the restaurants concerned.
The crackdown follows the judgment of the Delhi High Court dated 28 March 2025, which upheld the CCPA’s guidelines on the levy of service charges. Acting on complaints and its own investigations, the authority has directed the restaurants to immediately refund customers who were charged mandatorily and has begun examining cases for further penal action.
The CCPA said the enforcement drive is aimed at deterring other food outlets from continuing the practice. In at least two cases, restaurants found to be in violation have been fined up to Rs 50,000. The authority has also instructed the erring establishments to modify their billing systems, reiterating that compulsory service charges constitute an unfair trade practice.
Investigations revealed that several restaurants, including Cafe Blue Bottle in Patna and China Gate Restaurant (Bora Bora) in Mumbai, were automatically adding a 10 per cent service charge to customer bills.
“Closely monitoring complaints received on the National Consumer Helpline regarding levy of service charge and will continue to take strict action against non-compliant restaurants to safeguard consumer rights and prevent unfair trade practices,” said CCPA on the imposed penalties in an issued statement.
