CCPA action against Ranisa Restaurant for default 5% service charge: Detailed case analysis

1. Background of the proceedings

The Central Consumer Protection Authority (CCPA) initiated suo motu action on the basis of a complaint lodged by Ms. Joyshree Saikia against Ranisa Restaurant, Connaught Place, New Delhi.

According to the complaint, during a visit on 02.06.2025, the Restaurant:

  • Insisted on charging a 5% service charge, even after the assessee specifically asked for its removal from the bill; and
  • Served Rasgulla in which a human hair was allegedly found. When this was brought to the staff’s notice, the management merely offered a 10% discount, without addressing the hygiene issue or offering a proper apology.

The complainant enclosed a copy of the invoice and other documents to substantiate her allegations.

CCPA treated this as a case involving potential:

  • Violation of consumer rights, and
  • Unfair trade practice, with possible implications for consumers as a class.

Accordingly, CCPA commenced a preliminary inquiry under Sections 18(2) and 19 of the Consumer Protection Act, 2019.

2. Judicial and regulatory backdrop: Service charge in restaurants

Before examining the specific facts, CCPA referred to the legal framework already in place on service charge in hotels and restaurants.

2.1 Delhi High Court judgment upholding CCPA Guidelines

The Hon’ble High Court of Delhi, in its judgment dated 28th March, 2025 in National Restaurant Association of India & Ors. v. Union of India & Anr., held that:

“All restaurant establishments would have to adhere to the guidelines passed by the CCPA. If there is any violation of the same, action would be liable to be taken in accordance with law. CCPA is free to enforce its guidelines in accordance with law.”

The Court:

  • Upheld the Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with regard to levy of service charge in Hotels and Restaurants, 2022 (hereinafter, Guidelines, 2022);
  • Recognised that mandatory service charge is contrary to law and violates consumer rights; and
  • Clarified that while voluntary tips are permissible, such amounts cannot be automatically added to invoices.

2.2 CCPA Guidelines on service charge (2022)

The Guidelines, 2022, issued on 04.07.2022, inter alia provide:

“3. Service charge is being levied in addition to the total price of the food items mentioned in the menu and applicable taxes, often in the guise of some other fee or charge.”

“4. It may be mentioned that a component of service is inherent in price of food and beverages offered by the restaurant or hotel… Charging anything other than the said amount would amount to unfair trade practice under the Act.”

“7. Therefore, to prevent unfair trade practices and protect consumer interest with regard to levying of service charge, the CCPA issues the following guidelines —
(i) No hotel or restaurant shall add service charge automatically or by default in the bill.
(ii) Service charge shall not be, collected from consumers by any other name.
(iii) No hotel or restaurant shall force a consumer to pay service charge and shall clearly inform the consumer that service charge is voluntary, optional and at consumer’s discretion.
(iv) No restriction on entry or provision of services based on collection of service charge shall be imposed on consumers.
(v) Service charge shall not be collected by adding it along with the food bill and levying GST on the total amount”

These Guidelines form the backbone of CCPA’s analysis in the Ranisa Restaurant matter.

3. Preliminary scrutiny and issue of notice

After reviewing the complaint and the invoice, CCPA formed a prima facie view that:

  • The Restaurant’s levy of service charge appeared contrary to the Guidelines, 2022 and the Delhi High Court judgment;
  • The handling of the hygiene issue and grievance redressal may also amount to violation of consumer rights; and
  • The practices disclosed could affect consumers as a class, thus attracting Section 10 of the Consumer Protection Act, 2019.

A notice dated 20th February, 2026 was issued to the Restaurant calling for its response regarding alleged violations of:

  • The Consumer Protection Act, 2019, and
  • The Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants issued on 04.07.2022.

4. Restaurant’s response to CCPA notice

In its reply dated 20th March, 2026, the Restaurant made, inter alia, the following submissions:

  1. Service charge claimed as voluntary

    • It was asserted that the service charge was not forced, was voluntary, and was levied only with consumers’ consent.

  2. Disclosure through menu and opportunity to object

    • The Restaurant claimed that the menu clearly mentioned the service charge.
    • It argued that consumers were free to object at the billing stage and ask for removal of the service charge.

  3. Specific incident termed as misunderstanding

    • With regard to the complainant, the Restaurant suggested the incident might be due to a misunderstanding with billing staff.

  4. Offer to refund service charge

    • The Restaurant expressed willingness to refund the service charge collected from the complainant.

  5. Hygiene and licences

    • It submitted that it adhered to hygiene standards and possessed FSSAI and municipal licences.