CCPA cracks down on Delhi restaurants over service charge violations, orders refunds and issues notices

Time of India

29-04-2025

New Delhi: Marking a significant step in reinforcing consumer rights, the Central Consumer Protection Authority (CCPA) has directed five Delhi-based restaurants to refund mandatory service charges they failed to return, despite the order of the Delhi High Court in this regard.
In a strong move against unfair trade practices, the CCPA also issued notices to these restaurants after taking suo motu cognisance of the violation of consumer rights.
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In a statement, the consumer affairs department said that the action was being taken against Makhna Deli, Xero Courtyard, Castle Barbeque, Chaayos and Fiesta by Barbeque Nation for failing to refund mandatory service charges despite the Delhi HC's order. "Notices have been issued under the Consumer Protection Act, 2019, directing the restaurants to refund the service charge amounts," it said.
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The department said the measure is aimed at reducing the undue pressure on consumers to pay additional charges when availing services at any restaurant, as "no hotel or restaurant shall force a consumer to pay a service charge, nor shall it be collected under any other name".
Justice Prathiba Singh of Delhi HC had on March 28 dismissed two petitions of restaurant bodies — National Restaurant Association of India (NRAI) and Federation of Hotel and Restaurant Associations of India — challenging the CCPA guidelines prohibiting hotels and restaurants from mandatorily levying service charges on food bills.
The judge had said that collecting service charge on a mandatory basis "in a coercive manner" would be "contrary to the consumer interest and is violative of consumer rights".
Meanwhile, on Monday, NRAI moved the Delhi HC challenging Justice Singh's decision. This appeal is likely to be heard on May 9.
On July 4, 2022, CCPA had issued guidelines in its bid to curb unfair trade practices and protect consumer interests regarding service charges in hotels and restaurants. As per the guidelines, no hotel or restaurant shall add service charges to the food bill by default.