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The Central Consumer Protection Authority (CCPA) has taken action against five restaurants in Delhi for continuing to charge customers a mandatory service fee, even after the Delhi High Court upheld a ruling saying they could not do so. The restaurants facing action are Makhna Deli, Xero Courtyard, Castle Barbeque, Chaayos, and Fiesta by Barbeque Nation.
The consumer watchdog acted on its own and issued official notices to all five restaurants under the Consumer Protection Act, 2019. These notices order the restaurants to return the collected service charges to customers.
CCPA Reminds Restaurants: Service Charge Is Optional, Not Compulsory
In a statement, the Ministry of Consumer Affairs explained the move, “This measure is aimed at reducing the undue pressure on Consumers to pay additional amount at the time of availing services at any Restaurant as no Hotel or Restaurant shall force a consumer to pay Service Charge or Service Charge shall not be collected from consumers by any other name,” the Ministry said.
In other words, the government is reminding restaurants that they cannot make service charges mandatory or disguise them under another name. Customers must be clearly told that paying a service charge is completely optional.
Consumer-Friendly Guidelines Issued Back in 2022
This is not something that has just sprung up; in 2022, the CCPA set down rules stating how the hotels and restaurants should deal with service charges. These guidelines were in turn formed to stop unfair practices that prevent consumers from knowing they have other choices free from deceptive coercion to pay extra.
The rules say:
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Restaurants and hotels must not automatically add a service charge to the bill.
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They can’t call the service charge something else to sneak it in.
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No one can force a customer to pay it.
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Restaurants must make it clear that the service charge is voluntary.
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Customers cannot be denied service or entry based on whether they pay the service charge or not.
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Service charges cannot be combined with food prices and then taxed with GST.
High Court Supports the Rules, But Complaints Keep Coming
On March 28, 2025, the Delhi High Court ruled in favor of these CCPA rules, thereby making an official statement that service charges cannot be made compulsory by restaurants.
However, complaints kept rolling in. The CCPA said that even after the court’s decision, they received several calls and messages on the National Consumer Helpline (dial 1915), where consumers said certain restaurants were still charging service fees without asking them first. Some even said they weren’t allowed to refuse the charge.
These reports suggested that the restaurants were ignoring the law and violating customer rights by engaging in what the CCPA described as “unfair trade practices.”
By taking this action, the CCPA is sending a clear message to restaurants across the country. Customers have the right to decide whether or not they want to pay a service charge. Businesses that ignore this could face penalties under the Consumer Protection Act.
