Govt acts against service charges in restaurants: What are the rules?

The Central Consumer Protection Authority (CCPA) took suo moto action against five restaurants Makhna Deli, Xero Courtyard, Castle Barbeque, Chaayos, and Fiesta by Barbeque Nation for failing to refund mandatory service charges despite government and court orders, a press release said on Tuesday.

The notices have been issued under the Consumer Protection Act, 2019, directing the restaurants to refund the service charge amounts.

The crackdown follows rising complaints on the National Consumer Helpline (1915) from diners being forced to pay service charges and denied refunds.

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“This measure is aimed at reducing the undue pressure on consumers to pay an additional amount at the time of availing services at any restaurant, as no hotel or restaurant shall force a consumer to pay service charges or service charges shall not be collected from consumers by any other name," the ministry's release read.

What are the new rules?

• According to guidelines issued on July 4, 2022, by the Central Consumer Protection Authority (CCPA), established under Section 10 of the Consumer Protection Act, 2019, the rules are:
• Service charges cannot be added automatically or by default to the bill.
• They must not be collected under any other name.
• Payment of the service charge is completely voluntary and up to the consumer.
• Restaurants must not deny services if the consumer refuses to pay them.
• Service charges must not be clubbed with the bill for GST calculation.

What should a consumer do if they are asked to pay service charges?

If a hotel or restaurant levies a service charge in violation of the CCPA (Central Consumer Protection Authority) guidelines, consumers have these options:

• Request the hotel or restaurant to remove the service charge from your bill.
• can complain via the National Consumer Helpline (NCH) by calling 1915 or using the NCH mobile app. This helpline offers pre-litigation dispute resolution.
• Can file a complaint about the unfair trade practice to the Consumer Commission. For faster resolution, use the e-daakhil portal at www.e-daakhil.nic.in.
• Can report the issue to the District Collector of the concerned area for investigation and further action under the CCPA.
• Send your complaint directly to the Central Consumer Protection Authority at com-ccpa@nic.in.

What was the Delhi High Court's order against service charges in restaurants?

Earlier on March 28, 2025, the Delhi High Court upheld the CCPA guidelines on service charges.

Also Read | NRAI appeals Delhi HC’s order against automatic levy of service charge

Subsequently, it came to the notice of the Central Consumer Protection Authority (CCPA), through complaints received on the National Consumer Helpline (1915), that grievances had been registered alleging that certain restaurants continued to impose a mandatory service charge without obtaining prior consent from consumers, thereby disregarding consumer rights and indulged in unfair trade practices as per the Consumer Protection Act, 2019.

(with ANI inputs)