CCPA ‘service’ to diners a pleasant refund

Proving that ‘Customer is King’, diners who had doled out more as ‘service charge’ for food they had earlier will now get refunds from service providers, in this case, the restaurants. Taking suo motu cognisance of complaints against 27 restaurants, the Central Consumer Protection Authority (CCPA) has fined and asked restaurants to refund the service charge amount to customers and also modify their billing system, since the mandatory levy of service charge had been declared as an unfair trade practice. The CCPA took action based on consumer complaints lodged on the government helpline number.

The complaints were against the Café Blue Bottle in Patna and China Gate in Mumbai, 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.

According to the Department of Consumer Affairs, investigations revealed that several restaurants were automatically levying a 10 per cent service charge by default, in clear violation of the Consumer Protection Act, 2019 and the CCPA Guidelines, which have now been upheld by the High Court of Delhi.

The action was initiated based on complaints received on the National Consumer Helpline (NCH), supported by invoices clearly reflecting the addition of a service charge. A detailed investigation established that such practices amounted to Unfair Trade Practice under Section 2(47) of the Act.

The action follows the judgment of the Delhi High Court, dated March 28, 2025, which upheld the guidelines issued by CCPA on the levy of service charge. According to officials, in the case of Café Blue Bottle, Patna, the CCPA directed the restaurant to refund the full amount of service charge to the consumer, discontinue the practice of levying service charge with immediate effect and pay a penalty of  INR 30,000.

In the case of China Gate Restaurant Private Limited (Bora Bora), Mumbai, the restaurant refunded the service charge during the hearing. The CCPA further directed the restaurant to: Modify its software-generated billing system to remove the default addition of a service charge or any similar charge.

It further directed the restaurant to pay a penalty of INR 50,000 for violation of consumer rights and unfair trade practice and to ensure that its email ID was made available on public platforms, active and functional at all times, for effective consumer grievance redressal, as mandated under the Act.

It may be noted that China Gate Restaurants Private Limited has had its presence since 1993 and has many brands such as China Gate, Tap-Resto bar, Bora Bora, Global Fusion, Caravan Serai, Red Box, and Goh-jia-ting. Among these CCPA has taken action against its outlet Bora Bora, which has three branches in Mumbai.

The guidelines stipulate that no hotel or restaurant should add a service charge automatically or by default to the food bill. No service charge shall be collected by any other name, as per the guidelines. CCPA guidelines also stipulate that consumers should not be forced to pay a service charge and must be clearly informed that it is voluntary and optional. No restriction on entry or provision of services should be imposed based on refusal to pay the service charge.