The Centre has clarified that restaurants across India cannot levy a mandatory service charge on food bills, stating that the practice violates consumer protection laws. The Ministry of Consumer Affairs said the Central Consumer Protection Authority has taken action against several establishments for adding the charge by default, despite clear guidelines and a Delhi High Court ruling upholding the ban. As part of the enforcement drive, Barbeque Nation was also issued a direction to stop collecting service charge after a complaint revealed an additional fee added to its bill.
Why Mandatory Service Charge Is Illegal
The Central Consumer Protection Authority has stated that compulsory service charge amounts to an unfair trade practice under the Consumer Protection Act, 2019. The authority's guidelines prohibit restaurants from adding the charge automatically, collecting it under any alternative name, or pressuring diners to pay. The Delhi High Court upheld these guidelines in March 2025, confirming that customers cannot be forced to accept a service charge on their bills. Restaurants must also clearly state that any service charge is voluntary and optional.
Key points from the guidelines include:
No hotel or restaurant shall add the service charge by default.
AdvertisementNo service charge shall be collected under any substitute name.
Refusal to pay cannot lead to denial of service.
AdvertisementGST cannot be applied on such charges if they are added unlawfully.
Action Taken Against Restaurants Nationwide
The CCPA has issued penalties against 27 restaurants for continuing to add default service charges. Inspections revealed that some outlets were adding a flat ten per cent to bills without consent and, in several cases, charging GST on the amount. Following complaints on the National Consumer Helpline, penalised restaurants were ordered to refund the charges and remove the automatic addition from their billing systems.
In multiple cities, enforcement teams found that restaurants continued with the practice even after the 2025 court ruling. Officials stated that further action will follow if restaurants fail to comply.
Barbeque Nation Directed To Discontinue Service Charge
Barbeque Nation Hospitality Ltd was ordered to stop levying the service charge after a customer complaint filed in March 2025 questioned an additional fee of ₹335. According to the CCPA order reviewed by Mint, the company had offered to adjust the amount against a future bill, but later issued a full refund after the matter was escalated. The grievance was then closed on the National Consumer Helpline. The authority said the case sets a clear precedent for other restaurant chains to follow.
Additionally, similar enforcement action was taken earlier against China Gate Restaurant Private Limited in Mumbai for adding a ten per cent charge to all bills by default and applying GST on it, despite the guidelines and High Court ruling.
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What Diners Can Expect Now
Under current rules, consumers have the right to:
Ask for the removal of any service charge added without consent.
Refuse to pay the charge entirely.
File complaints on the National Consumer Helpline if restaurants continue the practice.
Receive a refund for any service charge added automatically.
Officials have urged customers to report violations so that follow‑up action can be taken against repeat offenders.