Paid service charge at a restaurant? Govt cracks down, orders refunds in Patna and Mumbai cases

The Department of Consumer Affairs, Government of India recently pointed out that service charges are not compulsory. If a consumer is mandatorily charged service charge and has paid it, then the consumer should report it to the ministry through the dedicated helpline or WhatsApp. The helpline number is 1915 and the WhatsApp number is 8800001915.


On January 10, 2026, the Central Consumer Protection Authority (CCPA) in a press release said that their investigations has revealed that several restaurants, including Café Blue Bottle, Patna, and China Gate Restaurant Private Limited (Bora Bora), Mumbai, were automatically levying a 10% service charge by default, in clear violation of the Consumer Protection Act, 2019 and the CCPA Guidelines, which have now been upheld by the High Court of Delhi.


In the case of Café Blue Bottle, Patna, the CCPA directed the restaurant to:

• Refund the full amount of service charge to the consumer
• Discontinue the practice of levying service charge with immediate effect
• Pay a penalty of Rs 30,000

In the case of China Gate Restaurant Private Limited (Bora Bora), Mumbai, the restaurant refunded the service charge during the hearing. The CCPA further directed the restaurant to:

• Modify its software-generated billing system to remove default addition of service charge or any similar charge
• Pay a penalty of Rs 50,000 for violation of consumer rights and unfair trade practice
• Ensure that its email ID available on public platforms remains active and functional at all times for effective consumer grievance redressal, as mandated under the Act

The CCPA said that this action was initiated based on complaints received on the National Consumer Helpline (NCH), supported by invoices clearly reflecting default addition of service charge. A detailed investigation established that such practices amount to Unfair Trade Practice under Section 2(47) of the Act.

The Central Consumer Protection Authority is closely monitoring complaints received on the National Consumer Helpline regarding the levy of service charges and will continue to take strict action against non-compliant restaurants to safeguard consumer rights and prevent unfair trade practices.

Sonam Chandwani, managing partner, K S Legal says that iIf a restaurant levies a mandatory service charge in defiance of regulatory advisories and consumer objections, it may face action for unfair trade practice. The CCPA can issue directions to discontinue such conduct, order refund of the amount collected, impose penalties, and in appropriate cases initiate prosecution.

Chandwani says: "Repeated non-compliance may also attract reputational consequences and closer regulatory scrutiny."

According to Chandwani from KS Legal, merely renaming the levy as “fee,” “hospitality charge,” or any other label does not alter its character if, in substance, it is a compulsory charge over and above the price of food and GST.

Chandwani says: "The test in law is not the nomenclature but the effect. A consumer can rely on the invoice breakup, menu disclosures, and communication with staff to establish that the amount was mandatory and not voluntary. If the charge is automatically added without an opt-out, it would still fall within the mischief of unfair trade practice irrespective of the terminology used."

Is service charge mandatory in restaurants?

Apurva Agarwal, Founder, Universal Legal, Mumbai, said to ET Wealth Online that according to the law and Delhi High Court judgement, service charges are not mandatory.

The Central Consumer Protection Authority (CCPA) Guidelines from July 2022 say that restaurants can't add a service charge to a customer's bill without first asking them. According to the rules, clients don't have to pay the service fee and can't be pushed into paying it.

The Delhi High Court agreed with this point of view in March 2025. The court carefully looked into whether service charges are legal and decided that the Consumer Protection Act of 2019 makes it illegal to charge customers for them, even if they are named something else.

The Court made it clear that customers only have to pay the price of the meal on the menu plus any GST that was owed. It is against consumer rights to ask for anything different.

According to Agarwal, a restaurant can't impose a service fee without asking. If the customer doesn't want to pay this fee, they can say no, and the restaurant has to take it off the bill if they ask. Customers can choose whether or not to pay a service charge, and they can only do so if they want to.

If a restaurant refuses to remove the service charge, what can a consumer do?

Agarwal says that when a restaurant won't take off the service charge, the law affords customers a clear set of rights and options. Most of the time, consumers have two good options, and the best one for them relies on what is simplest or most comfortable for them at the time.

One way to handle this is to tell the restaurant that you can only pay the menu price plus GST, as the law requires, and not pay a service charge. The CCPA guidelines and the Delhi High Court decision both clearly support this. The consumer can ask for the charge to be modified again if the staff keeps pushing.

Agarwal says: “If you don't want to fight, you should pick the second choice. The customer can pay the full amount, including the service charge in question, but they should keep all of their papers and tell the company about the mistake right away.”

According to Agarwal, no matter what you do, it's really important to get proof. A clear picture of the bill, a menu that shows extra costs, and a note from the restaurant declaring they won't charge you are all good proof.

Agarwal says: “This paperwork permits groups that safeguard customers to do something, yet it still preserves the customer's rights.”

Can a police complaint be filed if the restaurant does not remove the service charge?

According to Agarwal, police usually don't get involved in conflicts about service bills since they're not crimes; they're about consumer rights. When people and restaurants argue over bills, the police usually don't get involved. On the other hand, the Consumer Protection Act says that groups like the CCPA, National Consumer Helpline, District Collectors, and Consumer Commissions must protect customers.

But it's crucial to know the difference between the billing problem and any crimes that might arise during the battle.

According to Agarwal, the Indian Penal Code specifies that scaring a consumer, holding them against their will, yelling at them, taking their phone, or blocking their path out are all crimes. Some of these things are threatening someone with violence or putting them in jail without a good reason.

Agarwal says: “In these situations, the consumer has every right to call the police because the problem is now about safety and breaking the law, not the service fee.”

Agarwal says that if the main issue is that the restaurant won't stop charging an illegal service fee, you should contact the consumer authorities instead of the police.

Can a restaurant collect service charges under another name?

According to Agarwal, some restaurants modify the name of the service charge to "staff fund," "facility charge," or "other charges" so that consumers don't pay too much attention to it. But the law is quite clear about this.

According to the CCPA, eateries can't name a service charge or anything else. The Delhi High Court has declared again that altering the name of a required fee does not make it legal.

Agarwal says: “The name doesn't matter as much as what it does. The legislation says that a service charge is a charge that is automatically added to an account and is considered as necessary, even if it has a different name.”

When asked how can consumers prove they were being charged service charge when it was not charged in that name, Agarwal says that a consumer only needs:

• A picture of the bill that shows the extra charge.
• If it talks about extra costs, provide a picture of the menu or display.
• A short remark on the bill or in a message saying that the business wouldn't take the charge off.
• A UPI photo or card slip that shows you paid.

Agarwal says: “Groups like NCH or CCPA can easily use this proof.”