Connaught Place restaurant charged Rs 80 extra as service fee without asking; GST was added on that charge too; CCPA orders it to pay Rs 10,000

A Connaught Place restaurant added Rs 80 to a customer's food bill as a service fee without asking him, and then charged GST on that added amount too, taking his final bill from Rs 800 to Rs 924. The Central Consumer Protection Authority (CCPA) has now fined the restaurant Rs 10,000 for this practice.

The case involves Zen Restaurant, located in B-25, Connaught Place, New Delhi. A customer, Akshay Kumar Malhotra, had ordered a non-veg lunch worth Rs 800 at the restaurant on May 3, 2025. His final bill came to Rs 924, after the restaurant added Rs 80 as a "discretionary service charge" and then applied GST on the enhanced amount. He raised the issue with the National Consumer Helpline on May 6, 2025.

What CCPA found in its investigation


CCPA took up the complaint on its own and directed its Director General (Investigation) to look into the matter. The investigation report found that the restaurant's billing software added the service charge to every bill automatically, without giving the customer a separate option to accept or decline it. There was no disclaimer on the bill stating that the charge was optional.

The report noted that this made the customer bear the burden of noticing the charge and objecting to it at the counter, rather than being asked whether he wanted to pay it. It also found that applying GST on this added amount meant the customer paid tax on a charge that had no legal basis, since a service charge is not a statutory levy like GST.

CCPA said the presentation of the charge, placed the same way as taxes on the bill, gave customers the impression that paying it was compulsory.

Restaurant's defence

The restaurant told CCPA that it had already refunded the Rs 80 (rounded to Rs 84 with tax) to the complainant soon after the National Consumer Helpline flagged the issue, and that the matter stood resolved. It argued that the charge was a discretionary service fee, similar to a tip, and the customer always had the option to decline it at the time of payment but chose not to.

At the hearing, advocate Dr Lalit Bhasin, appearing for the restaurant along with its owner Manpreet Singh, submitted that treating a single complaint as a class action was not legally sustainable, and that the restaurant had shut down in November 2025, so the question of it levying any service charge going forward did not arise.

Why CCPA rejected the restaurant's defence

CCPA held that a refund issued after a customer complains does not undo the violation, because the violation takes place at the moment the bill is generated, when the charge is added without the customer's informed consent. It said consent to pay must come before or at the time of billing, not after a dispute is raised.

The authority relied on the Delhi High Court's ruling of March 28, 2025, in National Restaurant Association of India and others versus Union of India, which had upheld CCPA's 2022 guidelines banning restaurants from adding service charge automatically or by default. The Delhi High Court, in that judgment, had said service charge is meant to be a voluntary payment, and collecting it on a mandatory or coercive basis goes against consumer interest.

CCPA also pointed out that since the bill was generated by software, the same default service charge would likely have been added to bills of many other customers, making it a case fit to be treated as a class action rather than an individual dispute.

Penalty and directions

CCPA held that the restaurant's conduct violated multiple provisions of the Consumer Protection Act, 2019, including a consumer's right to be informed and protection against unfair trade practices. While the law allows a penalty of up to Rs 10 lakh for such a violation, CCPA chose to impose only Rs 10,000, taking into account that the restaurant had refunded the amount promptly and had since shut down.

CCPA directed the restaurant to stop adding any service charge automatically or by default under any name, and to update its billing software accordingly. It also asked the restaurant to submit a compliance report within 15 days of receiving the order.