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The Central Consumer Protection Authority (CCPA) has initiated action against 27 restaurants across India for mandatorily levying service charges, declaring the practice a violation of consumer rights and an unfair trade practice under the Consumer Protection Act, 2019.
The action follows the judgment of the Delhi High Court Delhi dated 28 March 2025, which upheld the Guidelines issued by CCPA on the levy of service charge. The Court held that mandatory collection of service charges by restaurants is unlawful and noted that all restaurant establishments must comply with the CCPA guidelines. The Court further affirmed that CCPA is fully empowered to enforce its guidelines in accordance with the law. According to the CCPA, investigations triggered by consumer complaints received through the National Consumer Helpline (NCH) revealed that several restaurants were automatically adding service charges, often around 10 per cent, to food bills without customer consent. Such practices directly contravene the CCPA's 2022 guidelines, which state that service charges must be voluntary and not added by default or subject to GST. Among the cases cited, Cafe Blue Bottle in Patna was directed to refund the service charge collected from consumers, discontinue the practice immediately, and pay a penalty of Rs 30,000. China Gate Restaurant Private Limited (Bora Bora) in Mumbai was fined Rs 50,000 and instructed to modify its billing software to remove the default addition of service charges and to ensure an active grievance redressal mechanism. The CCPA said it will continue to closely monitor complaints related to service charges and take strict action against non-compliant establishments to protect consumer interests and curb unfair trade practices. (ANI)
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