In re Zen Restaurant Regarding Alleged Levying of Service Charge (CCPA Delhi)
Summary: The Central Consumer Protection Authority (CCPA) took suo-moto cognizance of a grievance registered by Akshay Kumar Malhotra before the National Consumer Helpline against Zen Restaurant regarding levy of a discretionary service charge. The consumer alleged that a bill of Rs. 924/- included a discretionary service charge of Rs. 80/-, besides applicable CGST and SGST.
The CCPA noted the Delhi High Court judgment dated 28th March 2025 in National Restaurant Association of India & Ors. Vs Union of India & Anr., which upheld the CCPA Guidelines on service charge and held that mandatory collection of service charge is contrary to law and violative of the guidelines. The Court also held that CCPA was free to enforce the guidelines in accordance with law.
The CCPA conducted a preliminary inquiry under Sections 18(2) and 19 of the Consumer Protection Act, 2019. It prima facie found that Zen Restaurant had levied service charge in the guise of “Discretionary Service Charge” through its software-generated bill. Since such billing could affect a wider class of consumers, the matter was treated as fit for class action under Section 10.
The Director General (Investigation) found that the restaurant had added a discretionary service charge of Rs. 80 to the Rs. 800 subtotal for Non-Veg Lunch. The investigation observed that the charge was automatically included without a documented consent mechanism, separate opt-in or post-order acceptance option. The invoice did not contain a disclaimer that the charge was optional and the presentation created an impression that payment was mandatory. The investigation further found that GST was applied to the enhanced amount and concluded that the practice violated consumer rights and constituted an unfair trade practice.
