In re China Gate Restaurant Private Limited (CCPA Delhi)
Central Consumer Protection Authority (CCPA) took suo motu cognizance of a consumer grievance registered on the National Consumer Helpline (NCH) on 27 April 2025 alleging mandatory levy of 10% service charge, refusal to remove it on request, misbehaviour by staff, and charging of GST on the service charge. The consumer supported the complaint with a bill dated 19 April 2025 showing separate service charges on food and alcohol, along with GST on the service charge component.
The CCPA noted that the Delhi High Court, by judgment dated 28 March 2025, had upheld the validity and enforceability of the CCPA Guidelines on levy of service charge and had clearly held that mandatory service charge is contrary to law, while voluntary tips are permissible only if not added by default and left entirely to consumer discretion. The grievance indicated that such unlawful levy could be impacting consumers as a class.
Acting under Sections 18(2) and 19 of the Consumer Protection Act, 2019, the CCPA conducted a preliminary inquiry, which revealed that service charge was levied despite the High Court judgment and the 2022 Guidelines, and that the amount had not been refunded. Since the bill was software-generated, the Authority noted the likelihood of default billing impacting a wider consumer base, warranting further action. A notice was issued on 2 May 2025 seeking the restaurant’s explanation.
