5 Delhi restaurants under CCPA scanner for non-refund of service charge; Know what the rules say

The Central Consumer Protection Authority (CCPA) has initiated suo motu action against five restaurants in Delhi for allegedly failing to refund mandatory service charges to customers, despite a recent judgment by the Delhi High Court upholding the authority’s guidelines on the issue.

The establishments under scrutiny include Makhna Deli, Xero Courtyard, Castle Barbeque, Chaayos, and Fiesta by Barbeque Nation.

The ministry of consumer affairs said that notices have been issued to these restaurants under the Consumer Protection Act, 2019, directing them to refund the service charge amounts collected in violation of the law.

The action follows multiple complaints received on the National Consumer Helpline (1915), where consumers reported being compelled to pay service charges without prior consent, a practice deemed an unfair trade practice under the law.

“No hotel or restaurant shall force a consumer to pay a service charge or collect it under any other name,” the CCPA said in its statement, adding that such charges must be voluntary and clearly communicated as optional.

In its guidelines issued on July 4, 2022, the CCPA laid out strict provisions to curb unfair trade practices in hotels and restaurants.

The guidelines stipulate that:

• No hotels or restaurant shall add service charge automatically or by default in the food bill.
• No collection of service charge shall be done by any other name.
• No hotel or restaurant shall force a consumer to pay service charge and shall clearly inform the consumer that service charge is voluntary, optional and at consumer’s discretion.
• No restriction on entry or provision of services based on collection of service charge shall be imposed on consumers.
• Service charge shall not be collected by adding it along with the food bill and levying GST on the total amount.

The Delhi High Court, in its judgment dated March 28, 2025, dismissed the petitions of restaurant bodies against the CCPA guidelines prohibiting hotels and restaurants from mandatorily levying a service charge on food bills.

On Monday, a plea filed by National Restaurants Association of India (NRAI) in the Delhi High Court challenged the order.

The appeal is likely to be listed before a division bench on Tuesday.

The CCPA, established under Section 10 of the Consumer Protection Act, 2019, is mandated to take action against violations of consumer rights, unfair trade practices, and misleading advertisements that harm public interest.