The Centre has reiterated that restaurants across India cannot impose a mandatory service charge on customers’ food bills, stating that such a practice violates consumer protection laws.
The Ministry of Consumer Affairs said the Central Consumer Protection Authority (CCPA) has already initiated action against several establishments that continued to levy service charges automatically, despite clear guidelines and backing from the Delhi High Court.
In March 2025, the Delhi High Court upheld the CCPA’s guidelines, affirming that customers cannot be compelled to pay a service charge. The court emphasized that any such charge must be clearly described as voluntary and optional.
Under the Consumer Protection Act, 2019, the CCPA considers a compulsory service charge to be an unfair trade practice. The authority’s rules prohibit restaurants from:
- Automatically adding a service charge to the bill.
- Collecting it under any alternative name.
- Denying service to customers who refuse to pay it.
- Charging GST on such amounts if they have been added unlawfully.
So far, the CCPA has imposed penalties on 27 restaurants for continuing to include default service charges. Inspections found that some outlets were adding a flat 10% to bills without customer consent and, in several cases, also levying GST on that amount. Following complaints lodged through the National Consumer Helpline, these establishments have been directed to refund customers and remove automatic service charge entries from their billing systems.
Among the recent cases, Barbeque Nation Hospitality Ltd was ordered to stop collecting service charges after a customer complaint in March 2025 over an additional ₹335 added to a bill. According to the CCPA’s order, the company initially offered to adjust the amount against a future visit but later issued a full refund once the matter escalated. Authorities have described the case as a precedent for other restaurant chains.
Earlier, enforcement action was also taken against China Gate Restaurant Private Limited in Mumbai for imposing a default 10% service charge and applying GST on it, contrary to the guidelines and court ruling.
Under the current framework, consumers are entitled to:
- Ask for removal of any service charge added without consent.
- Refuse to pay such a charge.
- File complaints through the National Consumer Helpline.
- Seek refunds for service charges imposed automatically.
Officials have urged customers to report violations to ensure strict action against repeat offenders.