Service charge additions to restaurant bills have resulted in a Rs 1 lakh penalty for Shangri-La Eros, New Delhi, after India’s consumer regulator found that the hotel automatically imposed a 10% levy on diners.

Key Takeaways

  • The CCPA said describing the charge as optional did not make automatic billing permissible.
  • The hotel said it had refunded a complainant and was stopping collection from October 1, 2026.
  • The hotel must submit a compliance report within 15 days of receiving the October 22 order.

Why the service charge drew a penalty

The Central Consumer Protection Authority (CCPA) found that the hotel’s billing practice required customers to opt out of a charge already included in their bills, rather than choose whether to pay it. In its October 22, 2026 order, the regulator said that approach created a financial burden without recorded, explicit consent.

The case followed consumer grievances about Mister Chai, a restaurant at the hotel, dated May 30 and June 10, 2025. One invoice examined by investigators showed a Rs 435 service charge on a food subtotal of Rs 4,350. GST was calculated after the charge was added.

The CCPA said the practice violated consumer rights and constituted an unfair trade practice. It directed the hotel to stop automatically adding or collecting a service charge under that name or any other description.

Existing guidelines and the hotel’s response

The order enforces existing rules rather than introducing a new service-charge requirement. The CCPA’s 2022 guidelines prohibit hotels and restaurants from adding the charge automatically, collecting it under another name or adding it to the food bill before levying GST. The Delhi High Court upheld the guidelines on March 28, 2025, finding that service charges and tips must remain voluntary.

Shangri-La Eros denied compelling customers to pay. It said the menu identified the charge as discretionary, staff sought consent and diners could request removal or a refund. The hotel also changed the description on menus and invoices to wording that included “Voluntary Service Staff Contribution (Optional).”

The regulator rejected those explanations, saying that a label or the option of a refund did not resolve the problem if the charge remained embedded in the bill by default. The hotel said it had processed a Rs 560 refund to the complainant on August 28, 2026, and was stopping collection from October 1. The CCPA said the practice continued until that date.

Next milestone

The next confirmed step is the hotel’s compliance report, due within 15 days of its receipt of the order.

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