UPSC Prelims Practice Questions — Mandatory Levy of Service Charge by Restaurants Violates Consumer Law: CCPA

Q1. In the context of consumer protection in India, the Central Consumer Protection Authority (CCPA) is best described as which one of the following?

  • A. A statutory regulator established by the Central Government under the Consumer Protection Act, 2019 to protect and enforce the rights of consumers as a class
  • B. A constitutional body created by the Ninety-seventh Constitutional Amendment to safeguard consumer rights
  • C. A quasi-judicial adjudicatory forum that replaced the District and State Consumer Disputes Redressal Commissions
  • D. An advisory committee constituted under the Consumer Protection Act, 1986 to recommend consumer welfare measures

Q2. With reference to the Central Consumer Protection Authority (CCPA), consider the following statements: 1. It is established under Section 10 of the Consumer Protection Act, 2019. 2. It functions under the Ministry of Consumer Affairs, Food and Public Distribution. 3. It has an Investigation Wing headed by a Director-General. 4. It is a constitutional body created by a specific amendment to the Constitution. Which of the statements given above is/are NOT correct?

  1. It is established under Section 10 of the Consumer Protection Act, 2019.
  2. It functions under the Ministry of Consumer Affairs, Food and Public Distribution.
  3. It has an Investigation Wing headed by a Director-General.
  4. It is a constitutional body created by a specific amendment to the Constitution.
  • A. 1 and 2
  • B. 3 only
  • C. 2 and 3
  • D. 4 only

Q3. The Consumer Protection Act, 2019 statutorily recognises how many consumer rights, including the right to seek redressal against unfair or restrictive trade practices?

  • A. Four
  • B. Five
  • C. Six
  • D. Eight

Q4. With reference to the CCPA Guidelines on levy of service charge dated 4 July 2022, consider the following: 1. There shall be no automatic or default addition of service charge to the bill. 2. Service charge shall not be collected under any other name. 3. Goods and Services Tax shall be levied on the service charge component. 4. A consumer cannot be denied entry or services for refusing to pay service charge. Which of the statements given above is/are NOT correct?

  1. There shall be no automatic or default addition of service charge to the bill.
  2. Service charge shall not be collected under any other name.
  3. Goods and Services Tax shall be levied on the service charge component.
  4. A consumer cannot be denied entry or services for refusing to pay service charge.
  • A. 1 and 2
  • B. 3 only
  • C. 4 only
  • D. 2 and 3

Q5. With reference to the Delhi High Court judgment dated 28 March 2025 concerning the CCPA service charge guidelines, consider the following: 1. The petitions were filed by the NRAI and the FHRAI. 2. The Court upheld the CCPA guidelines and held mandatory service charge to be impermissible. 3. The Court held that the CCPA guidelines were merely advisory in nature. 4. The Court imposed a cost of Rs 1 lakh each on the two petitioner associations. Which of the statements given above is/are correctly identified?

  1. The petitions were filed by the NRAI and the FHRAI.
  2. The Court upheld the CCPA guidelines and held mandatory service charge to be impermissible.
  3. The Court held that the CCPA guidelines were merely advisory in nature.
  4. The Court imposed a cost of Rs 1 lakh each on the two petitioner associations.
  • A. 1, 2 and 4
  • B. 1, 2 and 3
  • C. 2 and 3
  • D. 3 and 4

Q6. Consider the following statements regarding the evolution of service charge regulation in India: 1. In 2017, the Department of Consumer Affairs clarified that service charge in restaurant bills is optional. 2. On 4 July 2022, the CCPA issued guidelines prohibiting automatic addition of service charge. 3. On 28 March 2025, the Delhi High Court struck down the CCPA guidelines as unconstitutional. 4. On 10 January 2026, the CCPA took suo motu action against 27 restaurants. Which of the statements given above is/are correctly identified?

  1. In 2017, the Department of Consumer Affairs clarified that service charge in restaurant bills is optional.
  2. On 4 July 2022, the CCPA issued guidelines prohibiting automatic addition of service charge.
  3. On 28 March 2025, the Delhi High Court struck down the CCPA guidelines as unconstitutional.
  4. On 10 January 2026, the CCPA took suo motu action against 27 restaurants.
  • A. 1, 2 and 4
  • B. 1, 2 and 3
  • C. 2, 3 and 4
  • D. 1 and 3

Q7. The CCPA guidelines on service charge and the subsequent 2026 enforcement action against restaurants are administered by which one of the following?

  • A. Department of Consumer Affairs, Ministry of Consumer Affairs, Food and Public Distribution
  • B. Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry
  • C. Ministry of Corporate Affairs
  • D. Department of Revenue, Ministry of Finance

Q8. With reference to the CCPA's suo motu enforcement action of 10 January 2026 against restaurants, consider the following directions: 1. Restaurants were directed to refund the service charge amounts collected. 2. Restaurants were directed to modify software-generated billing systems to remove default addition of service charge. 3. A penalty of Rs 50,000 was imposed. 4. Restaurants were directed to permanently shut down their operations. Which of the statements given above is/are NOT correct?

  1. Restaurants were directed to refund the service charge amounts collected.
  2. Restaurants were directed to modify software-generated billing systems to remove default addition of service charge.
  3. A penalty of Rs 50,000 was imposed.
  4. Restaurants were directed to permanently shut down their operations.
  • A. 1 and 2
  • B. 3 only
  • C. 4 only
  • D. 2 and 4

Q9. With reference to the CCPA action of 10 January 2026 against 27 restaurants, consider the following statements: 1. The action was taken suo motu by the CCPA. 2. It was based on National Consumer Helpline complaints supported by invoices. 3. Mandatory service charge was treated as an unfair trade practice under Section 2(47) of the Consumer Protection Act, 2019. 4. Each restaurant was penalised Rs 5 lakh. Which of the statements given above is/are correctly identified?

  1. The action was taken suo motu by the CCPA.
  2. It was based on National Consumer Helpline complaints supported by invoices.
  3. Mandatory service charge was treated as an unfair trade practice under Section 2(47) of the Consumer Protection Act, 2019.
  4. Each restaurant was penalised Rs 5 lakh.
  • A. 1, 2 and 3
  • B. 1, 2 and 4
  • C. 2, 3 and 4
  • D. 1 and 4

Q10. Under the Consumer Protection Act, 2019, the term 'product liability' refers to which one of the following?

  • A. The responsibility of a product manufacturer, service provider or seller to compensate a consumer for harm caused by a defective good or a deficient service
  • B. The obligation of a manufacturer to insure every product against theft or accidental loss during transit
  • C. The duty of a seller to buy back unsold goods from retailers at the end of a warranty period
  • D. The liability of a consumer to pay compensation for damage caused to goods while on trial before purchase

Q11. The National Consumer Helpline (toll-free number 1915), whose invoice-supported complaints triggered CCPA action on service charge, operates under which one of the following?

  • A. Department of Consumer Affairs, Ministry of Consumer Affairs, Food and Public Distribution
  • B. Telecom Regulatory Authority of India (TRAI)
  • C. Ministry of Electronics and Information Technology
  • D. Ministry of Home Affairs