No Mandatory Service Charge: Centre As Restaurants Across India Slapped With Hefty Fines

Last Updated:February 10, 2026, 22:14 IST

The Centre said enforcement action will continue to ensure compliance and protect consumer rights.

The Centre on Tuesday said that levying a mandatory service charge on food bills violates consumer protection laws, warning that restaurants engaging in the practice are liable to face penalties.

The Ministry of Consumer Affairs, Food and Public Distribution said the Central Consumer Protection Authority (CCPA) has taken action against 27 restaurants across the country for what it described as “unfair trade practices".

The action was initiated suo motu under the Consumer Protection Act, 2019, which prohibits the compulsory collection of service charges.

According to the CCPA, automatically adding a service charge to a customer’s bill is unlawful.

The authority cited violations under Section 2(47) of the Act, which defines unfair trade practices. As part of the enforcement drive, Café Blue Bottle in Patna was fined Rs 30,000, while Mumbai-based restaurant China Gate was penalised Rs 50,000 for levying a default 10 per cent service charge on customers.

The ministry noted that the Delhi High Court, in March 2025, upheld the CCPA’s guidelines, affirming that mandatory collection of service charges by hotels and restaurants is contrary to law.

Under these guidelines, hotels and restaurants are barred from automatically or compulsorily adding a service charge to food bills, or collecting it under any alternative name.

Establishments must clearly inform customers that payment of a service charge is voluntary and optional, and cannot deny entry or services to those who refuse to pay it. The guidelines also specify that service charges cannot be subjected to GST.

Acting on complaints received through the National Consumer Helpline, the CCPA has directed erring restaurants to refund the full amount charged to consumers, immediately discontinue the practice, and remove the default inclusion of service or similar charges from their billing systems.

The ministry said enforcement action will continue to ensure compliance and protect consumer rights.

News india No Mandatory Service Charge: Centre As Restaurants Across India Slapped With Hefty Fines

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