Recently, the Central Consumer Protection Authority (CCPA) fined China Gate Restaurant Private Limited, ₹50,000 for automatically adding service charges to customers’ bills, a practice the authority said violates consumer rights and the law.

This company operates the Bora Bora outlets in Mumbai,

In its order, the CCPA held that the default levy of service charges amounted to an unfair trade practice under the Consumer Protection Act, 2019. It directed the restaurant to immediately change its billing software so that service charges are no longer added automatically.

The action follows a March 2025 judgment of the Delhi High Court, which upheld the CCPA’s 2022 guidelines clearly stating that hotels and restaurants cannot add service charges to food bills by default.

These guidelines had earlier been challenged by restaurant and hotel associations and were stayed in 2022, but became enforceable again after the High Court delivered its final verdict.

The case against China Gate arose from a complaint filed by a Mumbai customer on the National Consumer Helpline. The complainant alleged that Bora Bora had imposed a 10 per cent service charge over and above the bill amount and GST, and refused to remove it when asked. The bill, dated April 19, 2025, also showed GST being charged on the service charge itself.

Taking suo motu cognisance of the complaint, the CCPA carried out a preliminary inquiry and found that the service charge had been added even after the Delhi High Court’s March 28, 2025 ruling, which declared mandatory service charges illegal. The authority noted that the bill was generated through the restaurant’s software, indicating a standard practice that could affect consumers at large.

The restaurant claimed that the 10 per cent service charge was discretionary and collected only with the customer’s consent, and said there was a distinction between food and alcohol bills. It also offered to refund ₹624 to the complainant as a goodwill gesture. The CCPA, however, ordered a detailed investigation.

The Director General (Investigation) found that service charges were being added by default despite the High Court’s ruling, that GST was wrongly levied on the service charge, that the restaurant failed to resolve the consumer’s complaint despite repeated reminders, and that its publicly listed email address was not functional. The restaurant was also found to have not cooperated with the investigation.

During hearings in December 2025, the restaurant told the authority that it had stopped levying service charges following an internal memorandum dated April 30, 2025. It said new menu cards stating “We levy no service charge” had been introduced and that the complainant was refunded on December 8, 2025. Menu cards, placards at outlets and proof of refund were placed on record.

In its final order, the CCPA rejected the claim that the service charge was voluntary, noting that it originated from commands built into the billing software and was automatically added to every bill. The authority also observed that the restaurant continued to generate bills with service charges between March 28 and April 30, 2025, and criticised its lack of cooperation during the investigation.

Apart from imposing a ₹50,000 penalty, the CCPA directed the restaurant to modify its billing system, ensure a proper grievance redressal mechanism with a functional public email address, and submit a compliance report within 15 days.