Hotels Charging Service Charge Declared Illegal in India
India’s Central Consumer Protection Authority (CCPA) has penalised restaurants, including Barbeque Nation, for adding compulsory service charges and can be fined Rs. 50,000.
The Central Consumer Protection Authority (CCPA) has reiterated that restaurants in India cannot force customers to pay a service charge and that doing so violates consumer protection laws. Many diners routinely paid this fee assuming it was compulsory, but after a surge of complaints, authorities clarified that a service charge is entirely optional. A service charge is typically a 5 to 10 percent fee that some restaurants add to bills as a reward for staff, yet several establishments had been including it automatically without asking customers, leading people to believe it was similar to GST or other taxes and even encouraging them to pay an additional tip on top.
In July 2022, the CCPA issued official guidelines stating that restaurants cannot add a service charge by default and that customers have the full right to refuse payment. In March 2025, the Delhi High Court upheld these guidelines, ruling that making service charges compulsory is illegal and marking a major milestone for consumer rights. The rules state that no hotel or restaurant can add a service charge automatically, no such fee can be collected under any alternate name, GST cannot be applied to service charges if they are added unlawfully, and customers cannot be denied service for refusing to pay.
Following numerous complaints filed through the National Consumer Helpline, the CCPA took suo motu action and conducted a nationwide inspection. Several restaurants were found violating the rule by adding service charges without consent. As a result, 27 establishments across India were fined under the Consumer Protection Act 2019, with penalties of up to fifty thousand rupees for each violation. During the enforcement drive, Barbeque Nation was also directed to stop collecting service charges after a complaint revealed an unauthorized fee on its bill.
Officials have instructed restaurants nationwide to stop adding these charges on their own and reminded customers that they may decline to pay whenever it appears on a bill. Experts say the strict enforcement makes restaurant billing clearer and fairer for diners. For customers, it provides long overdue clarity and relief, and for restaurants, it serves as a strong reminder to follow the law and ensure that any service related payment remains a voluntary choice similar to tipping.
