CCPA cracks down on Delhi restaurants over non-refund of service charges

Earlier, on July 4, 2022, the CCPA had released a set of guidelines designed to eliminate unfair business practices

In a major development, top consumer panel has decided to take action against several Delhi restaurants over non-refund of service charges. The Central Consumer Protection Authority has taken suo motu cognizance following reports that five restaurants in Delhi failed to refund service charges, the Ministry of Consumer Affairs announced on Tuesday.

According to an official statement, the proceedings are underway against Makhna Deli, Xero Courtyard, Castle Barbeque, Chaayos, and Fiesta by Barbeque Nation. These establishments allegedly did not return mandatory service charges in defiance of a ruling by the Delhi High Court. As a result, the CCPA has issued notices under the Consumer Protection Act, 2019, ordering these restaurants to reimburse the collected service charges.

This initiative seeks to alleviate undue pressure on consumers who are often compelled to pay extra charges while dining out. As per the law, hotels and restaurants are prohibited from enforcing service charges or collecting them under alternate labels.

Earlier, on July 4, 2022, the CCPA had released a set of guidelines designed to eliminate unfair business practices and uphold consumer rights with regard to service charges in hospitality venues. The key directives include:

• Service charges must not be added automatically or by default to any food bill.
• Restaurants and hotels cannot collect service charges under any alternative terminology.
• Customers must be explicitly informed that paying a service charge is entirely voluntary and at their sole discretion.
• Access to a restaurant or its services must not be restricted based on a consumer’s willingness to pay service charges.
• Service charges cannot be bundled with the food bill or subjected to GST on the total combined amount.