The Central Consumer Protection Authority (CCPA) has held Chaayos (Sunshine Teahouse Pvt. Ltd.) guilty of indulging in unfair trade practices by levying service charge on customers despite clear legal guidelines prohibiting mandatory service charges in restaurants.

The order was passed by a Bench comprising Chief Commissioner Nidhi Khare and Commissioner Anupam Mishra in suo motu proceedings initiated on the basis of a complaint lodged through the National Consumer Helpline (NCH). The complainant alleged that Chaayos had charged service charge in addition to GST and refused to refund it, claiming that the charge was mandated by company policy and was non-refundable.

During the proceedings, Chaayos contended that it never imposed a mandatory service charge and that the charge was voluntary, optional, and removed whenever requested by customers. The company also stated that it had updated its billing system, revised its standard operating procedures, displayed prominent disclosures at outlets, and discontinued levying service charge from May 1, 2025.

However, after examining the investigation report, the CCPA found that despite the Delhi High Court's judgment in National Restaurant Association of India v. Union of India and Anr, which upheld the 2022 CCPA Guidelines prohibiting automatic levy of service charge, Chaayos continued to add service charge by default in customers' bills. The Authority observed that the billing software itself automatically added the charge, proving that consumers had no real discretion in deciding whether to pay it.

The CCPA further held that Chaayos' conduct violated consumers' rights under the Consumer Protection Act, 2019, amounted to an unfair trade practice, and breached the Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants, 2022. It also noted that the company failed to promptly redress the consumer's grievance despite repeated reminders from the National Consumer Helpline.

Accordingly, the Authority directed Chaayos to refund the service charge collected from the complainant, remove the default addition of service charge from its software-generated billing system, and pay a penalty of ₹50,000. The company has also been directed to submit a compliance report to the CCPA within 15 days of receiving the order.

In the matter of Chaayos (Sunshine Teahouse Pvt. Ltd.) regarding alleged levying of service charge, violation of Consumer Rights and Unfair Trade Practices

Case No.: CCPA-2/16/2025-CCPA

Click here to read/download the order