The Central Consumer Protection Authority fined China Gate Restaurant Private Limited Rs 50,000 for adding service charges by default at its Bora Bora outlets in Mumbai. The CCPA held the practice illegal and ordered the restaurant to change its billing system and ensure proper consumer grievance redressal.
The Central Consumer Protection Authority (CCPA) has fined China Gate Restaurant Private Limited, which runs the popular Bora Bora restaurant outlets in Mumbai, ₹50,000 for adding service charges automatically to customer bills, which is not allowed under consumer protection rules.
In an order passed on December 29, the CCPA said that adding service charges by default is an unfair trade practice under the Consumer Protection Act, 2019. The authority also directed the restaurant to immediately change its billing software so that service charges are not added automatically to bills.
The issue of service charges in hotels and restaurants has already been settled by the Delhi High Court. In March this year, the High Court upheld the guidelines issued by the CCPA in 2022.
These guidelines clearly state that hotels and restaurants cannot automatically or compulsorily add service charges to food bills. Customers have the right to decide whether they want to pay a service charge or not.
These guidelines were earlier challenged by the National Restaurants Association of India (NRAI) and the Federation of Hotel and Restaurant Associations of India (FHRAI).
The Delhi High Court had stayed the guidelines on July 20, 2022. However, after the final judgment of the High Court, the guidelines became valid again and are now binding on all restaurants and hotels.
The case against China Gate started after a customer from Mumbai filed a complaint on the National Consumer Helpline (NCH). The customer alleged that Bora Bora restaurant had added a 10 per cent service charge on the bill, over and above the food price and GST.
The customer also claimed that when he asked the restaurant staff to remove the service charge, they refused and forced him to pay it. The bill dated April 19, 2025, also showed that GST was charged on the service charge amount.
Based on this complaint, the CCPA took suo motu cognisance of the matter and started a preliminary inquiry. The authority found that the service charge was added even after the Delhi High Court’s judgment dated March 28, 2025, which had clearly stated that mandatory service charges are illegal.
The CCPA observed that the bill was generated through software, which showed that the practice could affect consumers “as a class.”
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The restaurant argued that the 10 per cent service charge was not compulsory and was collected only with the customer’s consent.
It also claimed that there was a difference between food and alcohol billing. The restaurant further offered to refund ₹624 to the complainant as a goodwill gesture. However, the CCPA was not satisfied and ordered a detailed investigation.
The Director General (Investigation) conducted the inquiry and found several violations. The investigation revealed that despite the High Court’s ruling, the service charge was added automatically by default through the billing system.
It was also found that GST was wrongly charged on the service charge, which is against the CCPA guidelines. The restaurant did not properly address the complaint raised on the National Consumer Helpline even after receiving reminders.
The publicly available email address of the restaurant was found to be non-functional, and the restaurant also failed to cooperate during the investigation. The DG concluded that all these actions violated consumer rights.
During hearings held in December 2025, the restaurant told the authority that it had stopped charging service fees after issuing an internal memorandum dated April 30, 2025. It also stated that new menu cards were circulated which clearly mentioned
“We levy no service charge.”
The restaurant added that it had refunded the complainant on December 8, 2025. To support its claims, it submitted copies of menu cards, placards displayed at outlets, and proof of the refund.
However, in its final decision, the CCPA rejected the restaurant’s claim that service charges were collected only with customer consent.
The authority observed,
“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,”
The CCPA also noted that the restaurant continued to issue bills with service charges between March 28 and April 30, 2025, even after the High Court judgment. It further criticised the restaurant’s conduct during the investigation, stating that non-cooperation was
“not desirable and lacks commitment towards consumer rights and interest.”
In its final order, the CCPA directed China Gate Restaurant Private Limited to immediately modify its billing software so that no service charge or similar charge is added by default. The authority imposed a penalty of ₹50,000 for violation of consumer rights and for indulging in unfair trade practices.
It also directed the restaurant to ensure proper grievance redressal by maintaining a working and functional public email address at all times.
The CCPA further ordered the restaurant to submit a compliance report within 15 days, confirming that all directions have been followed.
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