The Central Consumer Protection Authority (CCPA) has imposed a penalty of ₹50,000 on China Gate Restaurant Private Limited, which operates the Bora Bora outlets in Mumbai, for levying service charges by default in customers’ bills in violation of consumer rights and statutory guidelines.
In an order dated December 29, the authority held that the practice amounted to an unfair trade practice under the Consumer Protection Act, 2019, and directed the restaurant to immediately modify its billing software to remove the default addition of service charge.
Notably, in March this year, the Delhi High Court upheld guidelines issued by the CCPA in 2022, which laid down that hotels and restaurants should not add service charges automatically or by default to food bills.
These guidelines had been challenged before the High Court by the National Restaurants Association of India (NRAI) and the Federation of Hotel and Restaurant Associations of India (FHRAI). These guidelines were initially stayed by the High Court on July 20, 2022. However, they stood revived after the High Court's final verdict in the matter.
The case against China Gate arose from a grievance lodged by a Mumbai consumer on the National Consumer Helpline (NCH), alleging that Bora Bora had levied a 10 per cent service charge over and above the bill value and GST. The customer claimed that the restaurant refused to remove the service charge when asked about it and compelled its payment. The bill dated April 19, 2025, showed GST being charged on the service charge component as well.
Taking suo motu cognisance, the CCPA conducted a preliminary inquiry and found that the service charge had been added despite the Delhi High Court’s March 28, 2025 judgment upholding the CCPA’s guidelines, which declared mandatory service charges as being contrary to law. The CCPA noted that the Bora Bora bill was software-generated, indicating a practice potentially affecting consumers “as a class."
The restaurant had argued that the 10 per cent service charge was “discretionary” and levied only with customer consent, explaining that there was a bifurcation between food and alcohol. The restaurant also offered to refund ₹624 as a goodwill gesture. The CCPA, however, ordered a detailed investigation.
The Director General (Investigation) (DG) found that despite the High Court’s ruling, a service charge was added by default by the restaurant; that GST was levied on the service charge in contravention of the guidelines; that the restaurant failed to resolve the NCH grievance despite reminders; that its publicly listed email address was non-functional; and that it did not cooperate with the investigation. The report concluded that these acts violated consumer rights.
During hearings in December 2025, the restaurant submitted that it had ceased levying service charge following an internal memorandum dated April 30, 2025, and that it had circulated new menu cards stating “We levy no service charge." It added that it had also refunded the complainant on December 8, 2025. It produced menu cards, placards at outlets, and proof of the refund as well.
In its final ruling, the CCPA rejected the restaurant's claim that it only collected service charges with the customer's consent.
“It is important to note that the genesis of the service charge in the bill is the command embedded in the billing software, leading to default addition of service charge to every bill. Therefore it shall be erroneous to presume that the service charge was voluntary," it held.
The authority further observed that the restaurant continued to generate bills with service charges between March 28 and April 30, 2025, and that non-cooperation during the DG's investigation into the matter was “not desirable and lacks commitment towards consumer rights and interest."
The CCPA ultimately directed the restaurant to:
Modify its billing software to remove any default addition of service charge or similar charges;
Pay a penalty of ₹50,000 for violation of consumer rights and unfair trade practice; and
Ensure functional grievance redressal, including maintaining an active and functional public email address at all times.
The authority also ordered the submission of a compliance report within 15 days.
[Read Order]