New Delhi: Central government has intensified its crackdown on restaurants that continue to levy mandatory service charges, signalling stricter enforcement of consumer protection rules after years of complaints and a favourable court ruling. The latest action follows reports that several restaurants were automatically adding service charges to customers’ bills despite clear guidelines stating that such charges are voluntary.

Consumer Affairs Minister Pralhad Joshi on Monday reiterated that restaurants cannot force customers to pay a service charge. His remarks came as the Central Consumer Protection Authority (CCPA) initiated suo motu action against 41 restaurants across the country following complaints received through the National Consumer Helpline.

The move marks a significant shift from issuing guidelines to actively enforcing them, with authorities warning restaurants against unfair billing practices that mislead consumers.

Why is the government taking action now?

The government’s latest enforcement drive comes after the Delhi High Court, in March 2025, upheld the CCPA’s 2022 guidelines on service charges. The judgment removed legal uncertainty surrounding the issue and cleared the way for stricter action against restaurants that continue to impose mandatory service charges.

The CCPA has alleged that several establishments automatically added service charges to food bills without customers’ consent or refused to remove the charges even when diners requested it. Such practices, according to the regulator, violate consumer rights and amount to unfair trade practices under the Consumer Protection Act.

With complaints continuing to pour in through the National Consumer Helpline, the authority has now begun taking direct action against restaurants found violating the guidelines.

Are service charges legal?

Yes, but only when they are voluntary.

One of the biggest misconceptions among diners is that service charges are compulsory because they have appeared on restaurant bills for several years. However, the government has consistently maintained that customers cannot be forced to pay them.

The CCPA’s July 2022 guidelines clearly state that restaurants cannot automatically include a service charge in food bills. Customers are legally required to pay only for the food and beverages they order, applicable taxes and any other charges authorised by law.

Restaurants may invite customers to pay a voluntary service charge or leave a tip if they are satisfied with the service, but the payment must remain entirely optional.

What did the Delhi High Court decide?

Restaurant associations had challenged the CCPA guidelines in the Delhi High Court, arguing that service charges formed part of their business model and that customers were informed about them through menus and notices displayed inside restaurants.

However, the Delhi High Court upheld the CCPA’s guidelines in March 2025, affirming that restaurants cannot impose mandatory service charges on customers. The ruling strengthened the government’s position and paved the way for tougher enforcement against violations.

What restaurants cannot do

The government has clarified that restaurants cannot:

  • Automatically add a mandatory service charge to the bill.
  • Present the service charge as compulsory.
  • Refuse to remove the charge if a customer requests its removal.
  • Deny service or create inconvenience because a customer declines to pay the service charge.
  • Levy GST on a mandatory service charge.

At the same time, the government has made it clear that tipping remains a personal choice, and customers are free to voluntarily reward good service.

What should customers do?

If a restaurant includes a service charge that a customer does not wish to pay, they can ask the establishment to remove it from the bill. If the restaurant refuses, consumers can file a complaint through the National Consumer Helpline for further action.

The latest crackdown demonstrates the government’s intent to ensure compliance with consumer protection norms and prevent unfair billing practices in restaurants across the country.

Conclusion

The Centre’s action against 41 restaurants highlights a stronger enforcement approach following the Delhi High Court’s backing of the CCPA’s guidelines. While restaurants may continue to accept voluntary tips or service charges, they cannot make such payments mandatory. For consumers, the message remains clear: paying a service charge is a choice, not a legal obligation.