India, July 19 -- The Government of India has issued a release:
The Central Consumer Protection Authority (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 action has been taken based on complaints received through the National Consumer Helpline (NCH). The complaints were supported by invoices showing that service charge had been automatically added to consumers' bills without obtaining their explicit consent.
Based on these complaints, CCPA conducted investigations and 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. The Authority also found that such practice amounts to an unfair trade practice under Section 2(47) of the Consumer Protection Act, 2019.
The Hon'ble High Court of Delhi, in its judgment dated 28 March 2025 in National Restaurant Association of India & Ors. v. Union of India & Anr., upheld the validity of the CCPA's Guidelines on Service Charge and held that mandatory collection of service charge is contrary to law. The Court further clarified that all restaurant establishments are required to comply with the Guidelines and that CCPA is free to enforce them in accordance with law.
Key provisions of the CCPA Guidelines
The Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants, issued on 4 July 2022, provide that:
Action taken by CCPA
In one such case, CCPA 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 service charge collected from the consumer.
The company has also been directed to modify its software-generated billing system across all its outlets to ensure that service charge or any similar charge is not added automatically to consumers' bills. CCPA has also passed final orders against the following restaurant establishments:
Further proceedings are underway against other restaurants where complaints have been received and examined.
Consumers can report violation
CCPA encourages consumers to report instances where restaurants levy service charge by default through the National Consumer Helpline by calling 1915 (toll-free) or through the NCH platform. The Authority continues to closely monitor complaints relating to service charge and will take appropriate action against establishments found to be violating the Consumer Protection Act, 2019 and the Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants. CCPA remains committed to safeguarding consumer rights and ensuring fair, transparent and consumer-friendly business practices across the hospitality sector.
Disclaimer: Curated by HT Syndication.
