The Central Consumer Protection Authority (CCPA) has initiated suo moto action against five restaurants in Delhi — Makhna Deli, Xero Courtyard, Castle Barbeque, Chaayos, and Fiesta by Barbeque Nation — for failing to refund mandatory service charges despite a recent judgment by the Delhi High Court.
According to a statement issued by the Ministry of Consumer Affairs, Food & Public Distribution on Tuesday, the restaurants have been served notices under the Consumer Protection Act, 2019, directing them to refund service charges collected without consumer consent.
The move comes in the wake of continued complaints received on the National Consumer Helpline (1915), where consumers alleged that certain restaurants were still levying service charges automatically, in direct violation of existing consumer protection guidelines.
The CCPA had earlier issued comprehensive guidelines on July 4, 2022, to curb unfair trade practices and safeguard consumer interests regarding the imposition of service charges in hotels and restaurants. These guidelines clearly state that service charges should not be added automatically or by default to food bills. Restaurants are not permitted to collect service charges under any other name, and they cannot force consumers to pay such charges. It must be clearly communicated that service charges are voluntary, optional, and entirely at the consumer’s discretion. Additionally, no restaurant may deny entry or services based on a customer’s refusal to pay a service charge, and such charges cannot be included in the food bill or attract GST.
On March 28, the Hon’ble Delhi High Court upheld these CCPA guidelines, reinforcing that service charges must not be imposed without the explicit consent of the consumer.
The CCPA has underscored that its latest action aims to relieve consumers from undue pressure while dining out, and to ensure that their rights are protected as enshrined in the Consumer Protection Act, 2019.
Established under Section 10 of the Act, the CCPA is tasked with regulating issues related to consumer rights violations, unfair trade practices, and misleading advertisements that harm public interest.
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