Centre says levying mandatory service charge illegal; restaurants fined up to Rs 50,000

In March 2025, the Delhi High Court upheld the CCPA guidelines which state that mandatory collection of service charge by restaurants is unlawful.

The Ministry of Consumer Affairs, Food & Public Distribution said Tuesday that levying mandatory service charge on food bill is against consumer laws and restaurants practicing this are subject to penalty.

Central Consumer Protection Authority (CCPA), which comes under the Ministry, has imposed penalties on 27 restaurants across India citing "unfair trade practices."

The regulatory body took suo moto cognisance against the outlets under Section 2 (47) of the Consumer Protection Act, 2019, stating that mandatory levy of service charge by restaurants is unlawful.

Café Blue Bottle in Patna and Mumbai's China Gate have been fined Rs 30,000 and Rs 50,000 respectively for violation of the Consumer Protection Act, 2019 and the CCPA guidelines by levying a 10 per cent service charge by default.

In March 2025, the Delhi High Court upheld the CCPA guidelines which state that mandatory collection of service charge by restaurants is contrary to law.

These guidelines state that no hotel or restaurant shall add service charge automatically or by default in the food bill, no service charge shall be collected by any other name, consumers shall not be forced to pay service charge and must be clearly informed that it is voluntary and optional, no restriction on entry or provision of services shall be imposed based on refusal to pay service charge and service charge shall not be added to the bill and subjected to GST.

In response to complaints received on the National Consumer Helpline (NCH), the CCPA has directed the restaurants to refund the full amount levied on the consumer, discontinue the practice with immediate effect and remove the default addition of service or similar charges from their billing system.