The Central Consumer Protection Authority (CCPA) has slapped a fine of ₹50,000 on the operator of the popular Bora Bora restaurant chain in Mumbai for forcing customers to pay a service charge. The action highlights a strict crackdown on eateries that automatically add such charges to bills, a practice deemed illegal by the courts.
Restaurant Ignored Court Ruling and Guidelines
In an order dated 29 December, the CCPA found that China Gate Restaurant Private Limited, which runs the Bora Bora outlets, was routinely adding a 10% service charge by default to customer bills. Furthermore, the restaurant was charging GST on this service charge. This was a direct violation of established guidelines which state that any service charge must be purely voluntary and cannot be included automatically.
The regulator's investigation was triggered by a complaint from a Mumbai consumer filed via the National Consumer Helpline (NCH). The complainant alleged that the restaurant staff not only refused to remove the charge when objected to but also misbehaved.
Multiple Violations Uncovered
A detailed probe by the CCPA's director general (investigation) revealed several breaches. It was found that between 28 March and 30 April 2025, service charges were automatically added to all bills, proving the charge was not discretionary. The restaurant also failed to resolve the consumer's grievance despite multiple notices.
Adding to its violations, the establishment had a non-functional email address, severely limiting consumer access to grievance redressal. The CCPA noted that the refund to the original complainant was processed only after regulatory intervention.
While the restaurant claimed the charge was discretionary and stated it had stopped the practice after the court ruling, it failed to provide evidence of compliance during the period under investigation.
CCPA Directs Corrective Actions
Given that Bora Bora has several outlets in Mumbai, the CCPA stated the practice had the potential to affect a large number of consumers. Along with the penalty, the authority has directed the company to:
- Modify its billing software to remove the default service charge setting.
- Ensure all consumer grievance channels remain functional at all times.
- Submit a compliance report within 15 days.
The order reiterated that while consumers are free to tip staff if they wish, restaurants cannot add a service charge automatically, use alternative names for it, or make service provision conditional on its payment. Violations will attract penalties under the Consumer Protection Act, 2019.
Broader Crackdown on Service Charges
This case is part of a wider enforcement drive. The CCPA's action is backed by a landmark 28 March 2025 ruling by the Delhi High Court in the case of National Restaurant Association of India vs Union of India. The court upheld the CCPA's guidelines and clearly stated that mandatory service charges are illegal.
In a related move in April, the CCPA had taken suo motu action against five Delhi restaurants—Makhna Deli, Xero Courtyard, Castle Barbeque, Chaayos, and Fiesta by Barbeque Nation—for failing to refund mandatory service charges. Notices were issued directing them to refund the amounts and comply with the guidelines.
Consumer rights advocates have welcomed the strict action. Ashim Sanyal, Chief Operating Officer of Consumer Voice, said such orders send a strong signal that consumer rights cannot be undermined by billing software defaults or opaque practices.
Failure to comply with CCPA directions can lead to a fine of up to ₹10 lakh for the first offence and up to ₹50 lakh for subsequent violations. Queries sent to China Gate Restaurant regarding the order were not immediately answered.
