Service Charges Cannot Be Added to Bill or Taxed with GST: CCPA Declares Mandatory Levy Illegal
As per the guidelines issued by CCPA on 4th July 2022, no hotel or restaurant shall add service charge automatically or by default in the food bill. The same has been upheld by the Delhi High Court.
The Central Consumer Protection Authority ( CCPA ) declared that mandatory service charges collected by the restaurants are illegal. Such collections cannot be added to the bill or taxed with the Goods and Services Tax ( GST ). The authority suo moto took cognizance against 27 restaurants across the country. After the Delhi High Court decision dated March 28, 2025. The court upheld the...
The Central Consumer Protection Authority ( CCPA ) declared that mandatory service charges collected by the restaurants are illegal. Such collections cannot be added to the bill or taxed with the Goods and Services Tax ( GST ).
The authority suo moto took cognizance against 27 restaurants across the country. After the Delhi High Court decision dated March 28, 2025. The court upheld the Guidelines issued by CCPA on levy of service charge, where it said that the collection of service charge by restaurants is contrary to law.
The court said that the CCPA is fully empowered to enforce its guidelines in accordance with law.
As per the guidelines issued by CCPA on 4th July 2022, no hotel or restaurant shall add service charge automatically or by default in the food bill. It also said that the consumers shall not be forced to pay service charge and must be clearly informed that it is voluntary and optional.
‘No restriction on entry or provision of services shall be imposed based on refusal to pay service charge’ states the CCPA guidelines.
CCPA says that after the investigation which complaints raised through National Consumer Helpline (NCH), it found restaurants, including Café Blue Bottle, Patna, and China Gate Restaurant Private Limited (Bora Bora), Mumbai, levying 10% service charge by default.
‘It is a clear violation of the Consumer ProtectionAct, 2019 and the CCPA Guidelines, which have now been upheld by the Hon’ble High Court of Delhi’ said the authority.
A penalty of Rs. 30,000 and Rs. 50,000 were levied on Café Blue Bottle and Rs. China Gate Restaurant Private Limited, Mumbai.
In the case of Café Blue Bottle, the authority levied a penalty of Rs. 30,000 and directed to refund the full amount of service charge to the consumer.
The authority ordered China Gate Restaurant Private Limited, Mumbai to modify its software-generated billing system to remove default addition of service charge or any similar charge. It also levied a penalty of ₹50,000.
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