Key Update

Restaurants can no longer add service charges by default. In a recent move, the Central Consumer Protection Authority (CCPA) declared that forcing customers to pay a service charge is an unfair trade practice under the Consumer Protection Act, 2019. The Delhi High Court backed the guidelines and directed restaurants to comply strictly. The ruling reinforces consumer rights and brings greater transparency to restaurant billing.

What Restaurants Must Follow

Under the CCPA’s July 4, 2022, guidelines, restaurants:

• Must not add service charges automatically or by default.

• Must not collect service charges under any other name.

• Must clearly inform diners that service charges are voluntary.

• Must not deny entry or service if a customer refuses to pay.

• Must not add GST to a service charge.

The Ministry of Consumer Affairs has warned that violations will attract penalties.

Action Against Violators

After receiving complaints through the National Consumer Helpline, the CCPA penalised 27 restaurants across India for unfair practices. Authorities fined outlets, including China Gate, Bora Bora, and Cafe Blue Bottle, between ₹30,000 and ₹50,000 for adding a mandatory 10% service charge. Officials also directed them to refund collected amounts and remove default service charge options from their billing systems.

What This Means for You

You can now refuse to pay any service charge without fear of being denied service. If a restaurant violates the rule, you can file a complaint through the National Consumer Helpline. Dining out is now clearer, fairer, and fully in your control.

Source: Money Control