The Central Consumer Protection Authority (CCPA) has imposed a penalty on Bora Bora, a Mumbai-based restaurant operated by China Gate Restaurant Private Limited, after finding that it levied service charges by default despite clear legal prohibitions. The authority also directed the restaurant to immediately change its billing system and ensure proper consumer grievance redressal.
The order was passed after a detailed investigation into a complaint raised by a customer who alleged that he was forced to pay a service charge along with tax on it.
Background of the Case
The case began with a complaint filed by a Mumbai resident through the National Consumer Helpline in April 2025. The complainant stated that Bora Bora added a 10 percent service charge to his bill and also levied GST on that amount. When he requested removal of the charge, the restaurant staff allegedly refused and behaved discourteously, leaving him with no option but to pay.
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The bill, dated 19 April 2025, showed service charges applied separately on food and alcohol, increasing the total payable amount. The complaint triggered suo motu action by the CCPA, which treated the issue as potentially affecting a wider class of consumers.
During the preliminary inquiry, the CCPA found that the service charge had been added automatically through the restaurant’s billing software. The authority noted that such a practice directly violated the guidelines issued in July 2022, which clearly state that service charges must be voluntary and cannot be added by default.
In its response, the restaurant claimed that the service charge was discretionary and applied only with customer consent. It further stated that the amount was meant for staff welfare and offered to refund the disputed sum as a goodwill gesture.
However, the authority found these explanations insufficient and ordered a detailed investigation by the Director General (Investigation).
The investigation revealed that Bora Bora continued to levy service charges even after the Delhi High Court, in March 2025, upheld the CCPA guidelines and declared mandatory service charges illegal.
The report noted that the billing software was programmed to automatically add the service charge, making it impossible to treat the payment as voluntary. It also found that GST was wrongly calculated on the service charge component, contrary to regulatory instructions.
Further, the restaurant failed to respond to multiple notices, did not cooperate during the investigation, and could not provide proof that the refund had been processed in time. The authority also observed that the restaurant’s official email address for consumer communication was non-functional for a significant period.
“The default addition of service charge through software negates the claim that the charge was voluntary,” the authority observed while reviewing the investigation report.
Court-Backed Legal Position
The CCPA relied heavily on the Delhi High Court’s ruling, which clearly held that service charges or tips are voluntary payments. The court had stated that such amounts “ought not to be added by default in the bill and should be left to the customer’s discretion.”
The authority reiterated that displaying menu prices creates a legitimate expectation that the consumer will only pay the listed price along with applicable taxes, and nothing more.
Final Decision and Directions
After considering all submissions and evidence, the CCPA concluded that Bora Bora had violated consumer rights and engaged in unfair trade practices.
The authority directed the restaurant to immediately modify its billing software to remove any default service charge. It also imposed a penalty of ₹50,000 on China Gate Restaurant Private Limited for violating consumer protection laws.
In addition, the restaurant was instructed to keep its consumer grievance email active at all times and submit a compliance report within 15 days.
With these directions, the authority disposed of the matter.
Case Title: China Gate Restaurant Pvt. Ltd. (Bora Bora)
Case No.: CCPA-2/26/2025-CCPA
Case Type: Consumer Protection – Unfair Trade Practice
Decision Date: 29 December 2025
