Service Charge on Restaurant Bills: What the CCPA's New Order Means for Diners

You finish a meal, the bill arrives, and a line reading "service charge 10%" has already been added above the GST. Many diners pay it without a second look. A fresh order of the Central Consumer Protection Authority (CCPA), dated 22 October 2026, is a useful reminder that this practice is not lawful when the charge is added on its own, even if the menu calls it optional.¹

What the regulator decided this week

The CCPA imposed a penalty of Rs 1 lakh on a restaurant at a five-star hotel in New Delhi after two diners complained that 10% had been added to their food bills, with GST then calculated on the higher total. The restaurant argued that its menu described the charge as discretionary, that guests could ask for it to be removed, and that it had refunded the complainants. The authority did not accept this. In its view, a bill that includes the charge by default turns the system into an "opt-out", where the guest has to object at the counter. Renaming the levy as a "voluntary staff contribution" did not change the outcome either. The restaurant was directed to stop the practice and file a compliance report within 15 days.¹²

Where the rule comes from

On 4 July 2022 the CCPA issued guidelines on service charge in hotels and restaurants, using its power under Section 18(2)(l) of the Consumer Protection Act, 2019 to frame guidelines that prevent unfair trade practices.³⁴ In short, the guidelines say:

• No hotel or restaurant may add a service charge automatically or by default to the bill.
• It cannot be collected under any other name.
• Guests cannot be forced to pay it and must be told clearly that it is voluntary.
• Entry or service cannot be refused because a guest declines to pay it.
• It cannot be added to the food bill with GST then charged on the combined amount.

Restaurant associations challenged these guidelines. On 28 March 2025, the Delhi High Court dismissed the challenge in National Restaurant Association of India & Ors. v. Union of India & Anr., W.P.(C) 10683/2022. The court held that a mandatory service charge is contrary to law, that collecting it under various labels is misleading and amounts to an unfair trade practice under Section 2(47) of the 2019 Act, and that a tip remains the customer's free choice.⁵

Why a note on the menu is not enough

The key idea in both the judgment and the new order is consent. A line in small print does not show that a diner actually chose to pay extra. When the amount is already printed in the bill, the burden shifts to the guest to spot it and ask for its removal, often in front of staff and companions. The law expects the opposite: the bill should reflect the menu price and taxes, and anything extra should be the guest's decision. The High Court also noted that restaurants remain free to build the cost of service into the menu prices themselves.⁵

Practical points

• For diners: read the bill before paying. If a service charge or a similar line has been added, you may ask for it to be removed. Tipping for good service is still entirely your call.
• Keep the invoice. The recent orders were based on actual bills showing the default levy.
• Complaints: grievances can be lodged on the National Consumer Helpline (1915) or with the District Consumer Commission, including online through the e-Jagriti platform (which has replaced the earlier e-Daakhil portal).³⁶
• For restaurant owners: check your billing software. A pre-filled service charge line, whatever it is called, can attract penalties. Leave any tip field blank for the guest to fill in, or price service into the menu.

The amount on any one bill may be small, but the principle is straightforward consumer protection: what you pay should be what you agreed to pay.