In a significant consumer rights intervention, the Union government has clarified that restaurants cannot impose mandatory service charges on food bills, stating that diners cannot be compelled to pay any additional amount beyond the listed price and applicable taxes. The move follows a surge in complaints from customers across the country about service charges being added automatically to restaurant bills.
The Ministry of Consumer Affairs, Food & Public Distribution has stated that levying a default service charge violates consumer protection norms, and establishments found engaging in such practices may face penalties. Authorities emphasised that any additional charge must be voluntary and cannot be enforced on customers under any circumstances.
“The Central Consumer Protection Authority (CCPA) has taken suo motu cognizance against 27 restaurants located across the country for violation of consumer rights and adoption of unfair trade practices under Section 2(47) of the Consumer Protection Act, 2019, relating to the mandatory levy of service charge. The action follows the judgment of the Hon’ble High Court of Delhi dated 28 March 2025, which upheld the Guidelines issued by CCPA on levy of service charge. The Court held that mandatory collection of service charge by restaurants is contrary to law and observed that all restaurant establishments are required to adhere to the CCPA guidelines. The Court further affirmed that CCPA is fully empowered to enforce its guidelines in accordance with law,” the press release by PIB said.
Acting on multiple complaints, the Central Consumer Protection Authority (CCPA) has taken action against 27 restaurants nationwide for automatically adding service charges to bills. The regulator described the practice as unfair and a breach of consumer rights, warning establishments against continuing the practice.
The crackdown has already resulted in financial penalties for several restaurants. Among those fined are China Gate and Bora Bora in Mumbai and Café Blue Bottle, which were penalised for imposing a 10% mandatory service charge on customers’ bills. The fines ranged from ₹30,000 to ₹50,000 for violating consumer protection guidelines and continuing to add service charges by default.
The CCPA further directed the restaurant to, “Modify its software-generated billing system to remove default addition of service charge or any similar charge. Pay a penalty of ₹50,000 for violation of consumer rights and unfair trade practice. Ensure that its email ID available on public platforms remains active and functional at all times for effective consumer grievance redressal, as mandated under the Act.”
The government’s position is supported by the Delhi High Court, which has upheld the CCPA’s guidelines declaring that compulsory service charges are unlawful. The guidelines clearly state that no hotel or restaurant may add a service charge automatically or collect it under any alternative label. They also affirm that customers cannot be pressured or compelled to pay such charges.
Consumer authorities have directed establishments found in violation to refund the full amount collected as service charges and immediately discontinue the practice. The National Consumer Helpline has also issued advisories asking restaurants to comply with the rules and warned of further penalties for continued non-compliance.
The CCPA has said it will maintain strict oversight of complaints related to service charges and continue enforcement measures against erring establishments.
Consumers have been encouraged to report any instances of mandatory service charges or other unfair billing practices, as the government moves to strengthen transparency and protect dining customers from unauthorised fees.
