The Central Consumer Protection Authority (CCPA) has initiated suo moto action against five Delhi restaurants – Makhna Deli, Xero Courtyard, Castle Barbeque, Chaayos, and Fiesta by Barbeque Nation – for their alleged failure to refund mandatory service charges to customers. This action comes despite a clear judgment by the Hon’ble High Court of Delhi upholding the CCPA’s guidelines against the forceful levy of such charges.
Established under Section 10 of the Consumer Protection Act, 2019, the Central Consumer Protection Authority (CCPA) is the apex body tasked with regulating matters concerning the violation of consumer rights, unfair trade practices, and misleading advertisements that are detrimental to public and consumer interests.
The CCPA has issued notices to these restaurants under the Consumer Protection Act, 2019, directing them to immediately refund the illegally collected service charge amounts to consumers.
This decisive step by the consumer watchdog aims to alleviate the undue pressure on consumers to pay extra amounts when dining out. The CCPA has consistently maintained that no hotel or restaurant can compel a customer to pay a service charge under any name.
The CCPA had issued comprehensive guidelines on July 4, 2022, to curb unfair trade practices related to service charges in the hospitality industry. These guidelines explicitly state that:
- No hotel or restaurant can automatically or by default add a service charge to the food bill.
- Service charges cannot be collected under any other name.
- Hotels and restaurants cannot force consumers to pay a service charge and must clearly inform them that it is voluntary, optional, and at their discretion.
- No restrictions on entry or service provision can be imposed based on a consumer’s refusal to pay a service charge.
- Service charges should not be added to the food bill before the calculation of GST.
On March 28, 2025, the Delhi High Court firmly validated these CCPA guidelines on service charges. Following this ruling, the CCPA received numerous complaints through the National Consumer Helpline (1915) alleging that several restaurants continued to impose mandatory service charges without obtaining explicit consent from consumers. This blatant disregard for consumer rights and fair trade practices, as outlined in the Consumer Protection Act, 2019, prompted the CCPA’s swift action.
The current action against these Delhi-based restaurants serves as a strong warning to the hospitality industry that the mandatory levy of service charges will not be tolerated.
