The Central Consumer Protection Authority has initiated suo motu action against 41 restaurants across the country for violating consumer rights by levying service charge by default on bills, acting on complaints supported by invoices filed through the National Consumer Helpline. In one such case, the CCPA passed a final order against Chaayos, operated by Sunshine Teahouse Private Limited, imposing a ₹50,000 penalty and directing the company to reimburse the service charge collected from the complaining consumer.
How the Chaayos Case Unfolded
The case began after customer Shashank Sood filed a complaint with the National Consumer Helpline on March 30, 2025, alleging a Chaayos outlet had charged him a separate “service tax” beyond CGST and SGST. The bill in question showed a ₹15.33 service charge added to a ₹438 order, bringing the final amount to ₹476. Sood alleged the outlet refused to refund the charge, claiming it was mandatory and non-refundable per company policy.
Chaayos told the CCPA its service charge was entirely voluntary, and that customers were informed through point-of-sale signage that they could remove it or request a refund. The company also denied that Sood had ever requested a refund, stating a service charge on an earlier order he placed on March 27, 2025, had in fact been waived. The CCPA’s Director General (Investigation) subsequently found that Chaayos had continued adding the charge by default even after the Delhi High Court’s March 28, 2025 ruling upholding the CCPA’s service charge guidelines, and that the company had failed to resolve the complaint despite engagement from the National Consumer Helpline.
Why the Authority Rejected Chaayos’s Defence
Chief Commissioner Nidhi Khare and Commissioner Anupam Mishra held that a charge added by default through billing software cannot be treated as a voluntary customer payment, since its origin was a command embedded directly in the billing system rather than an active choice made by the customer at the point of payment. The CCPA found this reflected a clear pattern of deliberate non-compliance with both the CCPA guidelines and the Delhi High Court’s judgment, describing it as an open violation of judicial and regulatory direction.
The authority held that the practice violated consumer rights under Section 2(9) of the Consumer Protection Act, 2019, and constituted an unfair trade practice under Section 2(47), while also breaching provisions relating to misleading advertisement. Chaayos informed the authority it had discontinued service charges across all outlets and ordering channels from May 1, 2025, and submitted invoices demonstrating the charge was no longer being collected. The CCPA nonetheless ordered the company to refund Sood’s service charge, remove the default charge from its billing software entirely, pay the ₹50,000 penalty, and file a compliance report within 15 days of the order. Advocate Nikhil Mandhotra represented Chaayos in the proceedings.
A Wider Crackdown Across the Hospitality Sector
The Chaayos ruling is one of seven final orders the CCPA has passed so far as part of its broader 41-restaurant action, with the others covering Cafe Blue Bottle in Patna, China Gate Restaurant, Fiesta Barbeque Nation, FOO Ahmedabad Restaurant, L’Opera French Bakery, and Zorro nightclub, a unit of Rudra Hospitality. Further proceedings remain underway against the remaining establishments under investigation.
The action rests on the CCPA’s Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants, issued in July 2022, which bar restaurants from adding service charge automatically or by any other name, require that any such charge be clearly presented as voluntary and at the customer’s discretion, and prohibit restricting service to customers who decline to pay it. The Delhi High Court’s March 2025 ruling in National Restaurant Association of India v. Union of India upheld the validity of these guidelines and confirmed the CCPA’s authority to enforce them nationwide. The CCPA has urged consumers to report any instance of default service charge through the National Consumer Helpline at the toll-free number 1915, or via the NCH platform, stating it will continue monitoring complaints and taking action against establishments found in violation.
