5 Delhi Restaurants Ordered To Refund Unlawful Service Charges Collected from Customers
Moneylife Digital Team 29 April 2025
The central consumer protection authority (CCPA) has initiated suo moto action against five Delhi-based restaurants for failing to refund mandatory service charges despite a clear ruling from the Delhi High Court. The establishments under scrutiny are: Makhna Deli, Xero Courtyard, Castle Barbeque, Chaayos, and Fiesta by Barbeque Nation.
 
The CCPA action follows a series of complaints registered through the national consumer helpline (NCH), alleging that the restaurants continued to levy mandatory service charges without seeking consumer consent. In response, the CCPA has issued notices under the Consumer Protection Act, 2019, directing these restaurants to refund the service charge amounts collected in violation of the law.
 
CCPA says its intervention aims to protect consumers from undue pressure at restaurants and emphasised that no hotel or restaurant may compel customers to pay a service charge or collect it under any other name.
 
Guidelines issued by the CCPA on 4 July 2022 clearly state that:
  • Service charges must not be automatically added to the food bill.
  • No collection of service charges is allowed by disguising it under different terminology.
  • Consumers must be informed that any service charge is purely voluntary and optional.
  • Access to services must not be conditional on payment of a service charge.
  • Service charges cannot be included in the food bill for the purposes of calculating goods and services tax (GST).
 
The Delhi High Court, in its judgement on 28 March 2025, upheld these CCPA guidelines, reinforcing consumer rights against unfair trade practices.
 
Despite the court’s ruling, the CCPA observed — through complaints — that certain restaurants continued to flout the norms, thereby violating consumer rights and engaging in practices deemed unfair under the Consumer Protection Act.
 
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