Restaurants cannot levy service charges automatically, says Centre

The central government has once again reiterated that hotels or restaurants levying service charges automatically is a violation of consumer laws and counts as unfair trade practices.

In a February 4 order issued by the Central Consumer Protection Authority (CCPA), the government took suo motu cognizance of a complaint registered through the National Consumer Helpline (NCH) against Barbeque Nation for levying Rs 335 as service charges.

According to the order, the complainant had initially approached the restaurant for issuing refund however the restaurant had instead offered to adjust the amount in any future bills.

After this, when the consumer directly asked for a refund through the NCH, he was issued his due amount in April 2025.

In their reply to the government, Barbeque Nation also said that after a Delhi High Court judgment in March 2025, which upheld the CCPA guidelines regarding service charges, the restaurant had stopped levying a service charge.

They also said that any service charges charged by the restaurant prior to the High Court judgment were being refunded to the customers if they requested.

An investigation into the complaint also concluded that the restaurant levying a service charge on January 18, which is the date the complainant had made his visit was not illegal as it was protected by an interim judicial order.

Earlier, the CCPA had issued hefty fines to restaurants for not complying with their guidelines. China Gate Restaurant Private Limited, which operates the Bora Bora restaurant chain in Mumbai, was fined Rs 50,000 in December 2025, for levying mandatory service charges.

CCPA guidlines

In July 2022, the CCPA had issued the following guidelines for protecting the consumer’s interests:

• No hotel or restaurant shall add service charge automatically or by default in the bill.
• Service charge shall not be collected from consumers 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.

If a consumer finds that a hotel or restaurant is levying a service charge in violation of the above-mentioned guidelines they may:

• Make a request to the concerned hotel or restaurant to remove service charge from the bill amount.
• Lodge a complaint on the National Consumer Helpline (NCH), which works as an alternate dispute redressal mechanism at the pre-litigation level by calling 1915 or through the NCH mobile app.
• File a complaint with the Consumer Commission
• Submit a complaint to the District Collector of the concerned district for investigation and subsequent proceedings by the CCPA.