The action was prompted by complaints lodged through the National Consumer Helpline (NCH), along with evidence indicating that service charges were included without the consumers’ explicit consent, as reported by the Department of Consumer Affairs.
Consumer Affairs Minister Pralhad Joshi stated that the CCPA has reiterated that payment of a service charge is discretionary and solely at the consumer’s choice. The authority has instructed the implicated restaurants to cease the automatic addition of service charges to bills.
Chaayos penalized; ordered to reimburse customer
In one instance, the CCPA issued a final order against Chaayos (Sunshine Teahouse Pvt. Ltd.), imposing a fine of ₹50,000 for automatically applying a service charge.
The authority also mandated the company to refund the service charge collected from the consumer and to revise its billing software across all outlets to prevent automatic inclusion of service charges or similar fees on customer bills.
Final orders against additional restaurants
Besides Chaayos, the CCPA has delivered final orders against the following establishments:
- 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 (a unit of Rudra Hospitality Private Limited)
The Department of Consumer Affairs indicated that investigations are ongoing against other restaurants where similar issues have been reported and analyzed.
CCPA highlights breach of service charge regulations
According to the Department of Consumer Affairs, these actions breach its 2022 Guidelines on Service Charge Levy in Hotels and Restaurants, constituting unfair trade practices under Section 2(47) of the Consumer Protection Act, 2019.
The ministry also noted that the Delhi High Court, in a ruling from last year, upheld the CCPA’s service charge guidelines, underscoring that mandatory service charges lack legal justification and empowering the consumer protection body to enforce compliance with the rules.
Guidelines stipulations
As per the guidelines issued in July 2022, restaurants are prohibited from:
- Automatically adding a service charge or any other similar charge.
- Forcing or exerting pressure on customers to pay a service charge.
- Refusing entry or service to customers who opt not to pay it.
- Combining the service charge with the food bill.
- Levying GST on the service charge.
The Department of Consumer Affairs urges consumers who encounter restaurants adding service charges without consent to file complaints through the National Consumer Helpline by calling 1915 or using its online grievance platform.
(Edited by : priyanka deshpande)
