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CCPA Penalizes Chaayos for Violations Under
The (CCPA) has delivered a significant blow to the practice of in the hospitality sector, slapping a ₹50,000 penalty on tea chain Chaayos ( ). The order, issued by Chief Commissioner Nidhi Khare and Commissioner Anupam Mishra, centers on the company’s insistence on embedding automatic service charges into its software-generated billing, a practice the authority has deemed a violation of both consumer law and recent .
A Bitter Cup: The Origins of the Dispute
The legal battle began with a simple bill. On , a consumer, Mr. Shashank Sood, filed a complaint through the (NCH) after being charged a "service tax" in addition to standard CGST and SGST at a Chaayos outlet. Despite the total order value of ₹438, the final bill climbed to ₹476 due to an added of ₹15.33. Crucially, when Mr. Sood requested the removal of this charge, the establishment allegedly refused, asserting that the levy was mandatory and non-refundable under internal company policy.
The Legal Landscape: Compliance and Defiance
The timing of this incident was highly significant. Just two days prior, on , the had issued a watershed ruling in . The High Court unambiguously upheld the CCPA’s 2022 guidelines, declaring that any mandatory collection of service charges is contrary to law.
Chaayos initially defended its position by arguing that its was entirely voluntary and that signage had been placed in stores to inform customers. However, the CCPA noted that labelling a charge as "Optional" upon the bill meant little if the software was hardcoded to add it by default.
"It shall be erroneous to presume that the
was voluntary. This effectively negates the restaurants contention before CCPA that the
was voluntary,"
the Authority noted in its final order.
Key Observations: The Authority’s Stance
Citing the breach of , the CCPA emphasized that the restaurant's failure to update its billing technology after the High Court's ruling demonstrated a lack of commitment to legal compliance. Key observations from the judgment include:
"The practice undertaken by the restaurant establishments of collectingthat too on a mandatory basis, in a coercive manner, would be contrary to consumer interest and is violative of."
"No hotel or restaurant shall addautomatically or by default in the bill."
"The restaurant's failure to update its software-generated billing system till, proves that it had made no reasonable effort to align its practices with the law."
A Call for Systemic Reform
While Chaayos eventually informed the CCPA that it had discontinued the practice across its 180+ outlets effective , the Authority maintained that the harm caused by the default billing practice required accountability.
In its final decision, the CCPA mandated three critical actions:
1. Reimbursement: The company must refund the wrongly collected from the complainant.
2. Technical Correction: Chaayos must immediately modify its software to remove the automatic addition of service charges.
3. Monetary Penalty: A fine of ₹50,000 must be paid for the .
This order serves as a stark reminder to the food and beverage industry: automated billing systems are governed by the same legal requirements as manual ones. The inability to distinguish between a voluntary tip and a hidden, default fee is not merely a technical error—it is a violation of the that invites the oversight of federal regulators. Chaayos is now required to file a compliance report within 15 days, ensuring that their systems finally align with the mandate of consumer choice.
