Restaurants, hotels cannot levy service charges, Centre reiterates

New Delhi: The Union government reiterated that hotels and restaurants in the country cannot automatically levy service charges and such a practice is a violation of consumer laws. The practice accounts for unfair trade practices, Siasat reported.

The National Consumer Helpline (NCH) received a complaint, and the Central Consumer Protection Authority (CCPA) took suo motu cognisance of the complaint. The complaint was against Barbeque Nation for levying Rs 335 as service charges.

According to the CCPA, the complainant initially approached the restaurant seeking a refund. However, the restaurant offered to adjust the disputed amount against future bills instead of issuing a direct refund.

Subsequently, the consumer raised the matter through the National Consumer Helpline (NCH), following which the refund was processed, and the due amount was credited in April 2025.

In its response to the government, Barbeque Nation stated that after a March 2025 judgment by the Delhi High Court upholding the Central Consumer Protection Authority’s (CCPA) guidelines on service charges, the restaurant had stopped levying such charges. The company also clarified that service charges collected prior to the High Court ruling were being refunded upon request from customers.

An investigation into the complaint found that the service charge imposed on January 18 — the date of the complainant’s visit — was not illegal, as it was covered under an interim judicial order in force at the time.

Earlier, the CCPA had imposed substantial penalties on restaurants for failing to comply with its guidelines. In December 2025, China Gate Restaurant Private Limited, which operates the Bora Bora restaurant chain in Mumbai, was fined Rs 50,000 for levying mandatory service charges.

In July 2022, the CCPA issued guidelines to protect consumers’ interests. Hotels and restaurants are prohibited from adding service charges automatically or by default to food bills, according to consumer protection guidelines. Establishments are also barred from collecting service charges under any other name or compelling customers to pay them. The guidelines clearly state that service charges must be voluntary, optional and left entirely to the consumer’s discretion. Additionally, restaurants cannot deny entry or services to customers who refuse to pay a service charge, nor can they club the charge with the food bill and levy GST on the combined amount.

Consumers who find that a hotel or restaurant has imposed a service charge in violation of these norms can seek redress through multiple channels. They may first request that the establishment remove the charge from the bill. If the issue remains unresolved, they can lodge a complaint with the National Consumer Helpline (NCH) by calling 1915 or using the NCH mobile application. Consumers also have the option to approach the Consumer Commission directly or submit a complaint to the District Collector for investigation and further action by the Central Consumer Protection Authority (CCPA).