Pranav B Prem

The Central Consumer Protection Authority (CCPA) has imposed a penalty of ₹50,000 on China Gate Restaurant Private Limited, which operates the Bora Bora restaurant outlets in Mumbai, for levying service charges by default in customers’ bills in violation of consumer rights and statutory guidelines. The Authority held that such mandatory addition of service charge amounted to an unfair trade practice under the Consumer Protection Act, 2019, and directed the restaurant to immediately modify its billing software to remove any default addition of service charge.

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The order was passed on December 29, 2025, by a coram comprising Chief Commissioner Nidhi Khare and Commissioner Anupam Mishra, after the Authority took suo motu cognisance of a consumer grievance lodged on the National Consumer Helpline (NCH) by a Mumbai resident against the Bora Bora outlet of China Gate Restaurant Private Limited.

The proceedings arose from a complaint filed by the consumer alleging that the restaurant had levied a 10 per cent service charge over and above the bill value and applicable GST. According to the complainant, when he requested removal of the service charge amounting to ₹624, the restaurant staff refused to do so and compelled him to pay it. The bill dated April 19, 2025, also showed that GST had been charged on the service charge component.

The CCPA noted that in March 2025, the Delhi High Court, in National Restaurant Association of India & Ors. v. Union of India & Anr., had upheld the CCPA’s 2022 Guidelines on levy of service charge, clearly holding that mandatory service charges are contrary to law and violate consumer rights. The High Court had further clarified that while consumers may voluntarily pay tips, such amounts cannot be added automatically or by default in restaurant bills. Despite this judicial pronouncement, the Bora Bora outlet continued to levy service charges by default through its billing system.

Following a preliminary inquiry, the CCPA found prima facie evidence that the service charge was being added automatically to software-generated bills, indicating a practice that could potentially impact consumers “as a class.” Accordingly, the Authority directed a detailed investigation by the Director General (Investigation).

In its submissions before the Authority, the restaurant contended that the 10 per cent service charge was discretionary and levied only with the consent of customers. It also claimed that the bill clearly bifurcated food and alcohol charges and that service charge was applied separately for clarity. As a goodwill gesture, the restaurant offered to refund the disputed amount to the complainant. However, the CCPA was not satisfied with these explanations and proceeded with a full investigation.

The Director General (Investigation), in a report submitted in September 2025, found that despite the Delhi High Court’s judgment, the restaurant had continued to levy service charges by default; that GST was being charged on the service charge component in violation of the CCPA Guidelines; that the restaurant failed to resolve the NCH grievance despite repeated reminders; that its publicly listed email address was non-functional; and that it did not cooperate with the investigation proceedings. The report concluded that these actions amounted to violation of consumer rights and unfair trade practices under the Consumer Protection Act, 2019.

During hearings held in December 2025, the restaurant submitted that it had discontinued the levy of service charge pursuant to an internal memorandum dated April 30, 2025, and that new menu cards stating “We levy no service charge” had been introduced across its outlets. It also claimed to have refunded the service charge amount to the complainant on December 8, 2025, and produced menu cards, placards and refund proof in support.

Rejecting the restaurant’s defence, the CCPA observed that the very origin of the service charge lay in the command embedded in the billing software, which resulted in automatic addition of service charge to every bill. The Authority categorically held, “It shall be erroneous to presume that the service charge was voluntary,” noting that the default software-based levy negated the restaurant’s claim of customer consent.

The Authority further observed that the restaurant continued to generate bills with service charges between March 28 and April 30, 2025, despite the Delhi High Court’s judgment, and that its lack of cooperation during the investigation reflected “non-compliance and lack of commitment towards consumer rights and interest.”

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In its final order, the CCPA held that China Gate Restaurant Private Limited (Bora Bora) had violated consumer rights under Section 2(9), engaged in unfair trade practices under Section 2(47), and breached the CCPA Guidelines on levy of service charge. Exercising its powers under Sections 20 and 21 of the Consumer Protection Act, 2019, the Authority directed the restaurant to modify its billing software to remove default service charges, imposed a penalty of ₹50,000, and ordered it to ensure effective consumer grievance redressal by maintaining an active and functional public email address. The restaurant was further directed to submit a compliance report within 15 days of receipt of the order.

Cause Title: China Gate Restaurant Private Limited (Bora Bora) 

Case No: CCPA- 2/26/2025-CCPA 

Coram: Chief Commissioner Nidhi Khare, Commissioner Anupam Mishra