In Re: Chaayos (Sunshine Teahouse Pvt. Ltd.) – Alleged Levy of Service Charge, Violation of Consumer Rights and Unfair Trade Practices (CCPA Delhi)
The Central Consumer Protection Authority (CCPA) took suo motu cognizance of a grievance registered on the National Consumer Helpline alleging that Chaayos (Sunshine Teahouse Pvt. Ltd.) had charged “Service Tax” separately along with CGST and SGST and refused a refund after stating that the charge was mandated by company management. The CCPA noted the Delhi High Court judgment dated 28.03.2025 upholding the CCPA Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants, 2022 and conducted a preliminary inquiry under Sections 18(2) and 19 of the Consumer Protection Act, 2019. Finding a prima facie case, it issued a notice to the restaurant. In response, the restaurant contended that the service charge was voluntary, optional, refundable on request, supported by point-of-sale disclosures, and later stated that it had revised its billing process, standard operating procedures and invoice formats, discontinued levy of service charge from 01.05.2025, and initiated steps to refund the complainant.
The CCPA found that the explanation required detailed investigation and directed the Director General (Investigation) to investigate. The Investigation Report concluded that despite the Delhi High Court judgment, the company had levied service charge by default in the customer’s bill dated 30.03.2025, failed to resolve the consumer grievance despite repeated communications from the National Consumer Helpline, and that subsequent changes to invoices and procedures did not alter the fact that the levy had occurred after the High Court judgment and contrary to the 2022 Guidelines. The report concluded that the company had imposed service charge without consumer discretion, failed to redress the grievance and engaged in default billing practices, amounting to violations of the Consumer Protection Act, 2019.
