Hotels can't add a service charge to your bill without informing you: CCPA acts against 41 restaurants

Hotels and restaurants cannot levy a service charge on your bill without informing you, nor can they treat it as a mandatory payment.

“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 a service charge by default on consumers' bills,” according to a press release by the Ministry of Consumer Affairs, Food & Public Distribution on 19 July.

The action was initiated after the National Consumer Helpline (NCH) received complaints from consumers who submitted invoices showing that a service charge had been added to their bills automatically without their explicit consent.

Why did CCPA take action?

According to the CCPA, its investigation found that restaurants had 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 stated that “such practice amounts to an unfair trade practice under Section 2(47) of the Consumer Protection Act, 2019.”

The consumer watchdog's action aims to protect consumers from being compelled to pay optional charges.

The CCPA's action follows the Delhi High Court's judgment dated 28 March, 2025, upholding the validity of the service charge guidelines issued by the authority.

The Court observed that “mandatory collection of service charge is contrary to law” and clarified that restaurants must comply with the guidelines. The Court also stated that the CCPA is free to enforce them in accordance with the law.

What are your rights as consumer?

The CCPA's guidelines, issued on 4 July 2022, make it clear that:

• No hotel or restaurant shall automatically or by default add a service charge to the food bill.
• No collection of service charge shall be done by any other name.
• No hotel or restaurant shall force a consumer to pay a service charge and must clearly inform consumers that it is voluntary, optional and entirely at the consumer's discretion.
• Restaurants cannot deny entry or refuse service to a customer who chooses not to pay the service charge.
• Service charge shall not be added to the food bill, and GST shall not be levied on such amount.

What action has CCPA taken?

In one case, the CCPA imposed a ₹50,000 penalty on Chaayos (Sunshine Teahouse Pvt. Ltd) for adding a service charge by default. It also directed 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,” the release mentioned.

CCPA has also passed final orders against several other establishments, including Cafe Blue Bottle, Patna, China Gate Restaurant Pvt. Ltd., Fiesta Barbeque Nation, FOO Ahmedabad Restaurant, L'Opera French Bakery Private Limited and Zorro – The Luxury Night Club.

“Further proceedings are underway against other restaurants where complaints have been received and examined,” the release stated.

What should you do if a restaurant adds service charge?

If you find a service charge added to your bill without your consent, you can ask the restaurant to remove it. If your request is refused, you can file a complaint with the National Consumer Helpline by calling 1915 (toll-free) or through the NCH platform.

The CCPA highlighted that it will continue to monitor complaints related to service charges and take action against restaurants found to be violating the Consumer Protection Act, 2019, and the service charge guidelines.

Disclaimer: This is for informational purposes only. Please check the official website for the latest laws.