No More Forced Tips: CCPA Cracks Down on Restaurants Adding Unauthorised Service Charges

The Central Consumer Protection Authority (CCPA) has taken suo moto action against 27 restaurants across India for violating consumer rights and using unfair business practices under Section 2(47) of the Consumer Protection Act, 2019.

This action comes after the Delhi High Court’s ruling on March 28, 2025, which supported CCPA’s rules on service charges. Restaurants cannot force customers to pay a service charge and must follow CCPA’s guidelines, says court. It also confirmed that CCPA has the legal power to make sure these rules are followed.

The guidelines from the CCPA issued on July 4, 2022, regarding service charges in hotels and restaurants say that:

• No hotel or restaurant will add a service charge automatically or by default to the food bill.
• No service charge will be collected by any other name.
• Consumers have the right to refuse to pay the service charge if they don’t want to.
• Consumers should know exactly what they are being charged for, and they should not be misled into paying extra.
• Refusal to pay a service charge cannot be used as a reason to restrict entry or access to services.
• Service charges should not be included in the bill or taxed under GST.

Investigations found that some restaurants, including Café Blue Bottle, Patna, and China Gate Restaurant Private Limited (Bora Bora) in Mumbai, were automatically adding a 10% service charge to bills without customer consent. This breaks the rules under the Consumer Protection Act, 2019, and the CCPA Guidelines. The Delhi High Court has now confirmed that this practice is illegal.

The action was taken after many people complained to the National Consumer Helpline (NCH) and showed the invoices that a service charge was being added by default. A detailed investigation found that this practice is considered an unfair trade practice under Section 2(47) of the Act.

In the case of Café Blue Bottle in Patna, the Consumer Protection Authority (CCPA) told the restaurant to refund the full service charge to customers, stop charging any service fee immediately, and pay a fine of Rs. 30,000.

In the case of China Gate Restaurant Private Limited (Bora Bora), Mumbai, the CCPA directed it to stop automatically adding a service charge or any similar fee to bills, pay a fine of Rs. 50,000 for violating consumer rights and unfair trade practices, and ensure that its public email address is always active so customers can easily send complaints and get responses.

The Central Consumer Protection Authority is keeping a close watch on complaints about service charges reported through the National Consumer Helpline. It will take strict action against restaurants that don’t follow the rules to protect consumers and stop unfair practices.