The Central Consumer Protection Authority’s 2022 guidelines notes that prices listed on menus already include the cost of food and services. Imposing an additional, non-consensual charge was therefore considered an unfair trade practice under the Consumer Protection Act, 2019.
Published Mar 28, 2025 | 3:40 PM ⚊ Updated Mar 28, 2025 | 3:40 PM
Restaurants and hotels must not add service charge automatically or by default in the food bill. (iStock)
Synopsis: The Delhi High Court has upheld the Central Consumer Protection Authority’s 2022 guidelines prohibiting automatic service charges in restaurants and hotels, dismissing a legal challenge by industry bodies and imposing ₹1 lakh in costs on the petitioners. The Court reaffirmed that service charges must be voluntary and clearly disclosed.
The Delhi High Court on Friday, 28 February, upheld the Central Consumer Protection Authority’s (CCPA) 2022 guidelines that prohibit hotels and restaurants from automatically adding service charges to food bills, Bar and Bench reported.
The CCPA guidelines, originally issued on 4 July 2022, aim to prevent unfair trade practices and protect consumer rights.
In Friday’s judgment, Justice Prathiba M Singh also imposed costs of ₹1 lakh on the petitioners – the National Restaurants Association of India (NRAI) and the Federation of Hotel and Restaurant Association of India (FHRAI) – who had challenged the validity of the guidelines.
The petitioners argued there was no law prohibiting restaurants from levying service charges, nor had there been any amendment to existing legislation making such a levy illegal.
Thus, they contended that the guidelines were arbitrary and sought for them to be set aside.
“In the absence of due authentication and promulgation of the guidelines, the contents thereof cannot be treated as an order of the Government,” the plea stated, according to Bar and Bench.
Soon after the plea, the guidelines were stayed by the court on 20 July 2022, according to the Hindu.
During the interim period, Justice Yashwant Varma directed that restaurants and hotels must clearly display whether service charges would be levied in addition to the food bill and applicable taxes.
Furthermore, the court directed that no service charge could be imposed on takeaway orders.
The CCPA’s guidelines mandate that hotels and restaurants:
The Union Ministry of Consumer Affairs, Food & Public Distribution, in a statement on 4 July 2022, said several complaints had been received through the National Consumer Helpline (NCH) regarding restaurants making service charge compulsory, adding it to bills without disclosure, and pressuring or embarrassing consumers who refused to pay.
The CCPA noted that prices listed on menus already include the cost of food and services. Imposing an additional, non-consensual charge was therefore considered an unfair trade practice under the Consumer Protection Act, 2019.
It further stated that tips or gratuities are voluntary and at the sole discretion of consumers. Such payments, it said, are based on the consumer’s satisfaction and cannot be presumed at the time of ordering.
(Edited by Dese Gowda)
