Restaurants can't force you to pay service charges: Chaayos, Barbeque Nation among 41 eateries facing action from consumer watchdog

The Central Consumer Protection Authority (CCPA) has initiated action against 41 restaurants and cafes across India for allegedly levying mandatory service charges on customers, reiterating that such charges cannot be imposed without a diner's consent.

The consumer watchdog took suo motu action, meaning it acted on its own after receiving numerous complaints from consumers, without waiting for a court order or formal petition.

The move comes as the government seeks to curb what it calls unfair trade practices in the restaurant industry.

Service charge is voluntary, says CCPA

The CCPA has clarified that a service charge is not a government tax and cannot be added to a customer's bill automatically.

Unlike the Goods and Services Tax (GST), which is mandatory and paid to the government, a service charge is considered voluntary and should only be paid if a customer wishes to reward good service.

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The authority said restaurants cannot force customers to pay the charge or present it as a compulsory fee.

Action against Chaayos and 40 other outlets

As part of its crackdown, the CCPA imposed a Rs 50,000 penalty on tea chain Chaayos, operated by Sunshine Teahouse Pvt Ltd.

The authority also directed the company to modify its billing software so that service charges are no longer added automatically to customer bills. It further ordered the restaurant chain to refund the amount collected from the complainant.

Investigations and proceedings are also underway against 40 other restaurants and cafes, including L'Opera French Bakery, FOO Ahmedabad, China Gate Restaurant, Cafe Blue Bottle in Patna, Fiesta Barbeque Nation and Zorro – The Luxury Night Club.

What restaurants can and cannot do

The CCPA's directions are backed by a Delhi High Court ruling and lay down clear rules for restaurants.

According to the guidelines:

The authority said these practices amount to unfair trade practices under consumer protection laws.

What customers should do

The CCPA has advised diners to check their bills carefully before making payment.

If a service charge has been added, customers can ask the restaurant to remove it, citing the CCPA guidelines.

If a restaurant refuses to comply, consumers can file a complaint through the National Consumer Helpline by calling 1915, using the NCH mobile application or submitting a complaint through the helpline's online platform.

The authority said consumers should retain a copy of the bill as evidence while filing complaints.

The latest action reinforces the government's position that tipping remains a matter of individual choice and cannot be made mandatory by restaurants.

The CCPA said it will continue monitoring compliance and take action against establishments found violating consumer protection guidelines on service charges.