NEW DELHI — The receipt at a Barbeque Nation outlet looked standard until the diner noticed an additional line item: a service charge of ₹335. When the customer filed a complaint in March 2025 questioning the extra fee, the restaurant chain initially offered to adjust the amount against a future bill. It was only after the matter was escalated that a full refund was issued.
That dispute has now become a focal point in a widening enforcement drive by the Indian government to dismantle the long-standing practice of adding mandatory service charges to food bills. The Central Consumer Protection Authority (CCPA) recently directed Barbeque Nation Hospitality Ltd to cease the practice entirely, citing the case as a clear precedent for other chains. The move is part of a broader crackdown by the Ministry of Consumer Affairs, which has clarified that levying such charges by default violates the country’s consumer protection laws.
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A Question of Consent
At the heart of the government’s intervention is the classification of mandatory service charges as an “unfair trade practice” under the Consumer Protection Act, 2019. For years, restaurants across India have routinely added a fee—often ranging from 5 to 10 percent—to the final tally, distinct from the government-mandated Goods and Services Tax (GST).
The Ministry of Consumer Affairs has now drawn a hard line, stating that no hotel or restaurant typically has the right to add this charge automatically. According to the guidelines issued by the CCPA, the payment of a service charge must be entirely voluntary and optional. Establishments are prohibited from collecting the fee under any alternative name or pressuring diners to pay it.
Crucially, the guidelines stipulate that a customer’s refusal to pay the service charge cannot be grounds for denial of service. The government’s position received significant legal backing in March 2025, when the Delhi High Court upheld the CCPA’s guidelines, confirming that customers cannot be forced to accept these additional costs.
Nationwide Enforcement Actions
Following the High Court’s ruling, the CCPA has moved from issuing advisories to taking punitive action. Investigations have revealed that despite the clear legal framework, compliance remains inconsistent.
The authority has penalized 27 restaurants across the country for continuing to levy service charges by default. Inspections uncovered that some outlets were adding a flat 10 percent fee to bills without seeking customer consent. In several instances, establishments compounded the violation by calculating GST on top of the unlawful service charge, inflating the final cost to the consumer.
The enforcement sweep extends beyond casual dining chains. In Mumbai, action was taken against China Gate Restaurant Private Limited for similar violations—adding a 10 percent default charge and applying taxes on it—despite the existing guidelines and the court order. The penalized restaurants have been ordered to refund the collected amounts and purge the automatic addition mechanics from their billing systems.
The Mechanics of the Ban
The guidelines leave little room for ambiguity regarding how restaurants must present their bills. The central tenet is transparency: restaurants must clearly state that any service charge is discretionary. The practice of burying the fee in the fine print or adding it to the total before the customer has a chance to review the bill is now explicitly prohibited.
Furthermore, officials have highlighted the illegality of applying GST to these charges. Since the service charge itself is deemed voluntary and not a government levy, taxing it as a mandatory component of the service constitutes a financial irregularity. The enforcement teams have stated that further actions will follow if inspections reveal that restaurants are failing to align their billing software with the new regulations.
Empowering the Diner
The current regulatory landscape places significant power back in the hands of the consumer. Under the enforced rules, diners have the explicit right to ask for the removal of any service charge added without their consent. If a restaurant refuses to remove the charge, customers can refuse to pay that portion of the bill entirely.
To support these rights, the government has bolstered its grievance redressal mechanisms. The National Consumer Helpline has become a primary channel for these disputes, as seen in the Barbeque Nation case. Officials have urged customers to report violations, noting that consumer complaints are essential for identifying repeat offenders and ensuring that refunds are processed for those who have been overcharged.
