CCPA fines Chaayos Rs 50,000 for illegal service charge
The Central Consumer Protection Authority (CCPA) has initiated suo motu action against 41 restaurants across the country for adding service charges to customer bills, saying that the practice is a violation of consumer rights and an unfair trade practice.
Among the final orders passed, CCPA fined Chaayos (run by Sunshine Teahouse Pvt Ltd) Rs 50,000 for the default and ordered it to refund the amount to the affected customers. The company has also been asked to modify its software-generated billing system across all outlets to ensure the charge is not added automatically.
The CCPA has also passed final orders against Cafe Blue Bottle, Patna; China Gate Restaurant Pvt Ltd; Fiesta Barbeque Nation (Barbeque Nation Hospitality Pvt Ltd); FOO Ahmedabad Restaurant (Pebble Street Hospitality Pvt Ltd); L’Opera French Bakery Pvt Ltd; and Zorro — The Luxury Night Club (Rudra Hospitality Pvt Ltd).
“Reaffirming that service charge is voluntary and entirely at the consumer’s discretion, the CCPA has imposed penalties on violators,” Consumer Affairs Minister Pralhad Joshi said on a social media platform. He said the authority has directed the erring restaurants to discontinue the automatic levy of service charge. Joshi said the action was taken based on complaints received through the National Consumer Helpline (NCH).
“Further proceedings are underway against other restaurants where complaints have been received and examined,” the ministry said in a statement. Investigators relied on customer invoices showing the charge had been added without any explicit consent being sought. This, the CCPA found, breached its 2022 guidelines on service charges in hotels and restaurants and amounted to an unfair trade practice under Section 2(47) of the Consumer Protection Act, 2019.
The crackdown draws support from a Delhi High Court ruling from March last year, which upheld CCPA’s guidelines and made clear that mandatory service charges have no legal basis - and that all restaurants must fall in line, with the CCPA empowered to enforce this.
Under the guidelines first notified in July 2022, restaurants cannot add a service charge by default or disguise it under another name, cannot pressure customers into paying it, and cannot deny service to those who decline. The rules also bar clubbing the charge with the food bill or applying GST on it.
The CCPA has urged diners who encounter such charges to lodge complaints via the toll-free NCH number (1915) or its online platform, and said it would keep monitoring the sector for violations.
