Case Law Details
In Re L’opera French Bakery Private Limited (L’opera India) (CCPA Delhi)
The Central Consumer Protection Authority (CCPA) took suo motu cognizance of a grievance filed by Ms. Varuni Khosla on the National Consumer Helpline (NCH) through Docket No. 7079303 dated 16.04.2025 against L’Opera French Bakery Private Limited alleging that service charge had been levied on the bill in addition to CGST and SGST. Referring to the Delhi High Court judgment dated 28.03.2025 in National Restaurant Association of India & Ors. v. Union of India & Anr., which upheld the CCPA Guidelines on levy of service charge and held mandatory service charge contrary to law, the CCPA conducted a preliminary inquiry under Sections 18(2) and 19 of the Consumer Protection Act, 2019. It found a prima facie case that the restaurant had continued to levy service charge through a software-generated billing system, potentially affecting consumers as a class, and issued a notice dated 02.05.2025.
In its reply dated 29.05.2025, the restaurant stated that it acknowledged the consumer’s complaint on 29.04.2025, agreed to reverse the service charge, and subsequently credited loyalty points equivalent to the service charge to the consumer’s membership account with the consumer’s consent. It updated the NCH portal regarding the resolution and submitted that consumers were informed that service charge was optional and that outlet teams had been instructed to prevent recurrence.
Finding that the response did not explain why service charge had been imposed despite the CCPA Guidelines of 2022 and the Delhi High Court judgment, the CCPA ordered a detailed investigation by the Director General (Investigation). The Investigation Report dated 06.02.2026 found that although the restaurant had refunded the service charge and taken corrective measures, such post facto compliance did not absolve it of liability for the period during which service charge had been levied. The report concluded that the restaurant had violated Sections 2(9) and 2(47) of the Consumer Protection Act, 2019 by levying service charge without consumer consent, violated Section 2(46)(vi) by imposing unreasonable conditions constituting an unfair contract, and violated the CCPA Guidelines relating to levy of service charge.
The Investigation Report was shared with the restaurant, which appeared through counsel and later submitted comments. The restaurant stated that the consumer’s grievance had been resolved to her satisfaction, that service charge had been completely discontinued across all outlets with effect from 01.05.2025 as a permanent policy change, and that it was not a member of NRAI or FHRAI. At the subsequent hearing, it reiterated that the consumer had been refunded and that service charge had been discontinued from 01.05.2025.
The CCPA referred to consumer rights under Sections 2(9)(ii) and 2(9)(v), the definition of unfair trade practice under Section 2(47), Section 2(28) relating to representations regarding price, and the CCPA Guidelines dated 04.07.2022 prohibiting automatic addition of service charge, collection under any other name, compulsory payment, restrictions based on payment of service charge, and collection of service charge by adding it to the food bill and levying GST on the total amount. It also referred to the Delhi High Court judgment holding that service charge or tip is voluntary, mandatory service charge constitutes an unfair trade practice, the CCPA Guidelines are valid, voluntary tips remain permissible, and restaurants are required to comply with the Guidelines.
After considering the investigation report and submissions, the CCPA found that the default addition of service charge originated from commands embedded in the restaurant’s billing software and therefore could not be regarded as voluntary. It held that the evidence established mandatory levy of service charge on consumers until 01.05.2025 in contravention of the CCPA Guidelines and the Delhi High Court judgment. The Authority further found that the restaurant had shown a pattern of non-compliance with the Guidelines, failed to update its software-generated billing system until 30.04.2025, and thereby continued unauthorized collection affecting consumer rights.
The CCPA concluded that the restaurant had violated consumer rights under Sections 2(9)(ii) and 2(9)(v), engaged in an unfair trade practice under Section 2(47) read with Section 2(46)(vi), made misleading representations under Section 2(28)(i) and (iii), and violated the Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants dated 04.07.2022. Referring to Sections 20, 21 and 21(7) of the Consumer Protection Act, 2019, and noting that the restaurant operated more than six branches with the potential to affect a large number of consumers, the CCPA directed the restaurant to immediately modify its software-generated billing system by removing the default addition of service charge or any similar charge, imposed a penalty of ₹30,000, and directed submission of a compliance report within 15 days of receipt of the order.
FULL TEXT OF THE JUDGMENT/ORDER OF CENTRAL CONSUMER PROTECTION AUTHORITY
1. The Central Consumer Protection Authority (hereinafter referred to as ‘CCPA’) has taken suo-moto cognizance of the grievance from Ms. Varuni Khosla registered at National Consumer Helpline 1915 (NCH) vide docket no. 7079303 dated 16.04.2025 against L’opera French Bakery Private Limited (L’Opera India) (hereinafter referred to as The Restaurant’).The grievance states service charge was imposed on the bill, when CGST and SGST was already charged. The Consumer in support of his allegations had attached the bill, which is reproduced below:
2. It is pertinent to mention that vide judgement dated 28th March, 2025 the Hon’ble High Court of Delhi in National Restaurant Association of India & Ors. v. Union of India & Anr. had held that: “All restaurant establishments would have to adhere to the guidelines passed by the CCPA. If there is any violation of the same, action would be liable to be taken in accordance with law. CCPA is free to enforce its guidelines in accordance with law.” Further the Hon’ble High Court had upheld the applicability of the CCPA guidelines which is in the interest of consumers and declaring the levy of any mandatory service charge as contrary to law and violates the guidelines.
3. The NCH grievance (docket no. 7079303 dated 16.04.2025) is indicative of an unlawful levy of service charge, which may be unfairly impacting a wider number of consumers as a class. The CCPA in exercise of power conferred under Section 18(2) and Section 19 of the Consumer Protection Act, 2019 (hereinafter referred to as ‘the Act, 2019’) conducted a preliminary inquiry to examine the veracity of the claim made against the aforementioned Restaurant.
4. In the preliminary inquiry, CCPA prima facie found, from the grievance registered on NCH, that the Restaurant had levied service charge on the bill despite the Hon’ble High Court of Delhi upholding the Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with regard to levy of service charge in Hotels and Restaurants, 2022 issued by CCPA (hereinafter referred to as Guidelines, 2022). Considering that the bill is software generated, the practice might be impacting a wider base of consumers visiting the restaurant thereby forming a class action as envisaged in section 10 of Consumer Protection Act 2019.
5. Based on the preliminary inquiry findings, CCPA directed the restaurant to furnish their response vide Notice dated 02nd May, 2025 for violation of the Act, 2019 and Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants issued on 04.07.2022.
6. In response to the said notice, the restaurant made the following submissions on 29th May, 2025:
a) It is submitted that the consumer raised the issue of the service charge via email on 29th April 2025, stating that the charge was applied without her prior knowledge or consent, which the consumer noted, was deemed illegal by the Hon’ble High Court of Delhi. On the same day, the restaurant responded, acknowledging her concern and confirming that, as per government guidelines, service charges are voluntary and require customer consent. The Restaurant assured the consumer that they would reverse the service charge and re-compute the bill accordingly.
b) Further, on 5th May 2025, the Restaurant offered to credit loyalty points equivalent to the service charge amount to consumer L’Opera membership account as an alternative to a direct refund. The Consumer agreed to this proposal on the same day, and the Restaurant confirmed the completion of this action on 9th May 2025.
c) The Restaurant updated the NCH portal with the details of the resolution, confirming that the matter was settled amicably by crediting loyalty points to Consumer’s account.
d) It is further submitted that to ensure compliance with the Act, 2019, the restaurant inform consumers about the optional service charge before ordering. They have also informed the outlets team to prevent this issue in the future.
7. Upon examination of the response of the Restaurant, CCPA observed that the matter required detailed investigation as the restaurant has not justified on why the service charge was imposed, despite the Guidelines issued on 2022 and the Hon’ble Delhi High Court upholding these Guidelines. CCPA was satisfied that there exists a prima facie case of Unfair Trade Practice and violation of consumer rights under the Act, 2019 along with the above-mentioned Guidelines of 2022 which impacted the consumer as a class.
8. In light of the above observations, CCPA vide letter dated 16th July, 2025 directed Director General (Investigation) to conduct a detailed investigation.
9. The Director General (Investigation) submitted the Investigation Report dated 06th February, 2026 to CCPA vide email dated 12th February, 2026. The findings in the Investigation report are as under:
a) The investigation revealed that the restaurant refunded the service charge to the consumer and acknowledged the complaint, taking corrective measures. However, such post facto compliance does not absolve the liability of the Restaurant for the period during which the service charge was improperly levied.
b) The restaurant is in violation of Sections 2(9) and 2(47) of the Consumer Protection Act, 2019, as it has levied service charge without the consumer’s consent. This practice raises regulatory concerns and constitutes an unfair trade practice that undermines consumer rights and autonomy.
c) Further, the Restaurant is in violation of Section 2(46)(vi) of the Act, as it has imposed unreasonable service charge and conditions that place the consumer at a disadvantage, constituting an unfair contract.
d) Such conduct also violates CCPA Guidelines to prevent unfair trade practices and protection of Consumer Interest with regard to levy of service charge in hotels and restaurants.
10. The Investigation Report submitted by DG (Investigation) was shared with the Restaurant vide letter dated 24th February, 2026 to furnish its comments and an opportunity of hearing was also provided to the Restaurant on 16th March, 2026 under Section 20 and 21 of the Act, 2019 before passing an order.
11. On 16th March, 2026. Advocate Ahmar Shad represented the restaurant and sought time to submit comments on investigation report. Further during the hearing, CCPA raised following query i.e., whether the restaurant is still levying service charge or not? If not, the effective date of discontinuation and its comments on investigation report.
12. The restaurant had submitted its comments on investigation report vide email on 16tth April, 2026 which is as follows:
a) Upon receipt of the consumer’s email dated 29.04.2025, the Company immediately acknowledged the inadvertent grievance on the same day and assured reversal/re-computation of the bill.
b) On 05.05.2025, the Company offered to credit equivalent loyalty points to the consumer’s L’Opera membership account as per her preference. The consumer accepted the proposal on the same day, and the credit was duly effected and confirmed on 09.05.2025.
c) The entire grievance was thus resolved amicably and to the complete satisfaction of the consumer within a few days of its receipt.
d) The matter was listed before the Authority for hearing on 16.03.2026 during which the Hon’ble Authority sought clarification on the current status of service charge collection and directed submission of comments on the Investigation Report.
e) It is most respectfully submitted that the Company took immediate corrective action to the complete satisfaction of the complainant, as evidenced by the email trail and the closure of the grievance on the National Consumer Helpline portal. No dispute or litigation ensued, and the consumer accepted the resolution without any further grievance.
f) As a proactive and bona fide measure, the Company had already rectified its internal policy and completely stopped the levy and collection of service charge across all its outlets with effect from 1st May 2025 i.e., within days of the incident.
g) The said decision was implemented as a permanent policy change to ensure full compliance with the CCPA Guidelines and the judgment of the Hon’ble Delhi High Court.
h) It is pertinent to note that the Investigation Report dated 06.02.2026 itself duly acknowledges and records the prompt and effective corrective measures undertaken by the restaurant.
13. In light of the restaurant’s response to the investigation report, the CCPA convened another hearing on 16th April, 2026. The key points of the submission include:
a) The restaurant has refunded to the consumer.
b) The restaurant has stopped levying service charge from 01st May, 2025.
c) The restaurant further submitted that they are not a member of NRAI or FHRAI.
14. Before delving into the specifics of the case, it is pertinent to examine the relevant legal framework that governs such transactions.
a. As per the Consumer Rights enshrined under Section 2(9) (ii) and (v) of the Act states that the consumer rights includes- “the right to be informed about the quality, quantity, potency, purity, standard and price of goods, products or services, as the case may be, so as to protect the consumer against unfair trade practices” and “the right to seek redressal against unfair trade practices or restrictive trade practices or unscrupulous exploitation of consumers.”
b. From the bare reading of Section 2 (28) of the Act, 2019 it can clearly be concluded that when a restaurant displays a menu with specific prices, the consumer is duly informed about the cost of the food. However, if a mandatory service charge is added later, it conveys an express or implied representation that the restaurant, a service provider had deliberately concealed the actual price of the food and service thereof, constituting an unfair trade practice.
c. Furthermore, Section- 2(47) of the Consumer Protection Act, 2019 defines “Unfair Trade Practice” which includes deceptive or unethical methods used to promote the sale of goods, use or supply of any goods or provision of services.
d. CCPA had issued Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants, on 4th July, 2022. The extracts of which are given below:
“3. Service charge is being levied in addition to the total price of the food items mentioned in the menu and applicable taxes, often in the guise of some other fee or charge.
4. It may be mentioned that a component of service is inherent in price of food and beverages offered by the restaurant or hotel. Pricing of the product thus covers both the goods and services component. There is no restriction on hotels or restaurants to set the prices at which they want to offer food or beverages to consumers. Thus, placing an order involves consent to pay the prices of food items displayed in the menu along with applicable taxes. Charging anything other than the said amount would amount to unfair trade practice under the Act.
7. Therefore, to prevent unfair trade practices and protect consumer interest with regard to levying of service charge, the CCPA issues the following guidelines —
(i) No hotel or restaurant shall add service charge automatically or by default in the bill.
(ii) Service charge shall not be collected from consumers by any other name.
(iii) No hotel or restaurant shall force a consumer to pay service charge and shall clearly inform the consumer that service charge is voluntary, optional and at consumer’s discretion.
(iv) No restriction on entry or provision of services based on collection of service charge shall be imposed on consumers.
(v) Service charge shall not be collected by adding it along with the food bill and levying GST on the total amount.”
e. The Hon’ble High Court of Delhi [National Restaurant Association of India & Ors. Vs Union of India & Anr.) passed the Judgment on 28th March, 2025 held in favor of CCPA wherein the Court held the following:
i. Service charge or TIP as is colloquially referred, is a voluntary payment by the customer. It cannot be compulsory or mandatory. The practice undertaken by the restaurant establishments of collecting service charge that too on a mandatory basis, in a coercive manner, would be contrary to consumer interest and is violative of consumer rights.
ii. The collection of service charge and use of different terminologies for the said charge is misleading and deceptive in nature. The same constitutes an unfair trade practice under Section 2(47) of the CPA, 2019.
iii. The guidelines framed by the CCPA are thus valid and are in the interest of the consumers and the same are upheld.
iv. While this Court holds that the mandatory collection of service charge is contrary to law and violates the guidelines, it is also of the opinion that if consumers wish to pay any voluntary Tip for services which they had enjoyed, the same would obviously not be barred. The amount however, ought not to be added by default in the bill/invoice and should be left to the customer’s discretion.
v. All restaurant establishments would have to adhere to the guidelines passed by the CCPA. If there is any violation of the same, action would be liable to be taken in accordance with law. CCPA is free to enforce its guidelines in accordance with law.
15. In light of the above provisions and consideration of the investigation report of DG Investigation (CCPA) along with the submissions of the Restaurant, CCPA arrives at the following findings:
(a) It is important to note that the genesis of the service charge in the bill is the command embedded in the billing software, leading to default addition of service charge to every bill. Therefore, it shall be erroneous to presume that the service charge was voluntary. This effectively negates the restaurants contention before CCPA that the service charge was voluntary. The facts and evidences in this case clearly established that the service charge was mandatorily levied on all consumers till 01st May, 2026, in contravention of the CCPA guidelines and the judgement of Hon’ble High Court of Delhi dated 28th March, 2025.
(b) The restaurant’s liability is also established through a clear pattern of deliberate non-compliance of the Guidelines, 2022 issued by CCPA which has been upheld by the Hon’ble High Court of Delhi. The restaurant has demonstrated a blatant violation of both judicial and regulatory directives.
(c) The restaurant’s failure to update its software-generated billing system till 30th April, 2025, proves that it had made no reasonable effort to align its practices with the law. This refusal to rectify automated billing errors suggests a continued unauthorized collection, thereby rendering the restaurant fully liable for the consumer rights violations.
(d) Hence, the Restaurant is in violation of the following provisions of Consumer Protection Act 2019:
(i) Consumer rights under section 2(9) (ii) of the Act, 2019.
(ii) Consumer rights under section 2(9) (v) of the Act, 2019.
(iii) Engaging in Unfair Trade Practice as defined in section 2(47) of Act, 2019 read with section 2(46) (vi) of Act, 2019;
(iv) Misleading advertisement under Section 2(28) (i) and (iii) of the Act, 2019.
(v) Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants, on 4th July, 2022.
16. Considering the above findings and the violations noted in the foregoing paras the CCPA is empowered under Section 20 and 21 of the Consumer Protection Act, 2019 to issue directions to modify the advertisement or discontinue such advertisement and practices, if necessary, it may, by order, impose a penalty which may extend to ten lakh rupees and for every subsequent contravention may extend to fifty lakh rupees. Further, Section 21 (7) of the above Act, 2019 prescribes that following may be regarded while determining the penalty:
i. the population and the area impacted or affected by such offence;
ii. the frequency and duration of such offence;
iii. the vulnerability of the class of persons likely to be adversely affected by such offence;
iv. the gross revenue from the sales effected by virtue of such offence
17. It is evident that the restaurant has a substantial consumer reach and market presence as the restaurant has more than 6 branches, and levy of service charge by default on bill has the potential to affect a large number of consumers. Therefore, the conduct of the restaurant attracts the applicability of Section 21(7) of the Act, 2019.
18. In light of the above CCPA issues the following directions:
I. To take immediate steps to modify its software generated billing system by removing default addition of service charge or charge by any other name.
II. Further in light of para mentioned above, the restaurant L’opera French Bakery Private Limited (L’Opera India) is directed to pay a penalty of Rs. 30,000/-
The Restaurant shall submit a compliance report of the above-mentioned directions to the CCPA within 15 days from the receipt of this order.
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