CCPA imposes ₹1 lakh penalty on Shangri-La Eros for levying service charge on restaurant bills

The Central Consumer Protection Authority (CCPA) has imposed a penalty of ₹1 lakh on Shangri-La Eros hotel in New Delhi for levying service charges on restaurant bills despite the Delhi High Court ruling that such charges must be voluntary.

A coram comprising Chief Commissioner Nidhi Khare and Commissioner Anupam Mishra held that adding default service charges to bills and putting the burden on customers to request removal of such charges violate consumer rights and amount to unfair trade practice.

The CCPA observed that merely describing a charge as optional did not make its collection voluntary when the amount was automatically included in the bill.

"Merely displaying the collection of non-statutory charge like 'service charge', on the menu card or on the bill does not cure the underlying compulsion," the Authority said.

The October 22 order arose from consumer complaints received in May and June 2025 alleging that Mister Chai, a restaurant at Shangri-La Eros, had imposed a 10 percent service charge on food bills.

The complaints prompted a preliminary inquiry followed by an investigation by the CCPA's Director General (Investigation).

The investigation found that the restaurant had levied a service charge of ₹435 on a bill of ₹4,350 in May 2025. In another instance, a service charge of ₹125 was imposed on a bill of ₹1,250 in June 2025.

The investigation concluded that automatically adding such charges created a misleading impression that their payment was compulsory.

Shangri-La Eros denied compelling customers to pay service charges. It submitted that its menu clearly described the levy as discretionary and that customers could refuse payment or request refunds.

The hotel also argued that customers had sufficient opportunity to decline the charge before settling their bills.

During the proceedings, the hotel informed the CCPA that it had renamed the levy as "Charges for Voluntary Service Staff Contribution (Optional)."

It further submitted that it had stopped collecting service charges across its restaurants from October 1, 2026, and refunded the amounts collected from the complainants.

However, the CCPA rejected the argument that the availability of refunds or the option to waive the charge made its automatic collection lawful.

The Authority held that stating on the menu that the charge could be waived upon request effectively created an opt-out mechanism, placing the burden on consumers to actively refuse payment.

It observed that this practice undermined free and informed consumer consent and exposed customers to social pressure at the billing counter.

The CCPA also found that renaming the charge as a voluntary staff contribution did not cure the illegality when it continued to be automatically added to bills.

It noted that the hotel had continued imposing the charge for nearly 15 months despite the judgment.

The CCPA consequently concluded that the hotel's conduct violated provisions of the Consumer Protection Act, 2019, relating to consumer rights, misleading representations and unfair trade practices.

The Authority directed Shangri-La Eros to discontinue automatically levying service charges or collecting them under any other name.

It also imposed a penalty of ₹1 lakh and directed the hotel to submit a compliance report within 15 days.

[Read Order]