UPSC Prelims Practice Questions — CCPA initiates suo motu action against 41 restaurants for levying service charge by default; action based on consumer complaints received through National Consumer Helpline

Q1. With reference to the Central Consumer Protection Authority (CCPA), consider the following statements: 1. It is established under the Consumer Protection Act, 2019 and functions under the Ministry of Consumer Affairs, Food and Public Distribution. 2. It may inquire into unfair trade practices either suo motu, on a complaint received, or on the direction of the Central Government. 3. Investigations on its behalf are carried out by an Investigation Wing headed by a Director-General. 4. It hears appeals filed against the orders of the National Consumer Disputes Redressal Commission. Which of the statements given above is/are correct?

  1. It is established under the Consumer Protection Act, 2019 and functions under the Ministry of Consumer Affairs, Food and Public Distribution.
  2. It may inquire into unfair trade practices either suo motu, on a complaint received, or on the direction of the Central Government.
  3. Investigations on its behalf are carried out by an Investigation Wing headed by a Director-General.
  4. It hears appeals filed against the orders of the National Consumer Disputes Redressal Commission.
  • A. 1, 2 and 3 only
  • B. 2, 3 and 4 only
  • C. 1 and 4 only
  • D. 1, 2, 3 and 4

Q2. When the CCPA acts against restaurants for levying service charge by default, it does so to check an 'unfair trade practice'. Under the Consumer Protection Act, 2019, an unfair trade practice is best described as which one of the following?

  • A. A trade practice that manipulates the supply of goods so as to raise their prevailing market price
  • B. A breach of contract by a trader that results in a deficiency in the service rendered to a consumer
  • C. A practice that adopts a deceptive or unfair method or practice to promote the sale, use or supply of goods or services
  • D. An agreement among competing traders to engage in predatory pricing against their rivals

Q3. Comparing the Department of Consumer Affairs' 2017 clarification on service charge with the CCPA's Guidelines of 4 July 2022, consider the following statements: 1. The 2017 clarification already described service charge as voluntary but was non-binding, whereas the 2022 guidelines were issued under a specific statutory power. 2. Unlike the 2017 clarification, the 2022 guidelines expressly prohibit adding service charge to the bill and then levying GST on the enhanced total. 3. The 2022 guidelines, going beyond the 2017 clarification, permit a restaurant to levy service charge by default provided it is printed on the menu card in advance. Which of the statements given above is/are correct?

  1. The 2017 clarification already described service charge as voluntary but was non-binding, whereas the 2022 guidelines were issued under a specific statutory power.
  2. Unlike the 2017 clarification, the 2022 guidelines expressly prohibit adding service charge to the bill and then levying GST on the enhanced total.
  3. The 2022 guidelines, going beyond the 2017 clarification, permit a restaurant to levy service charge by default provided it is printed on the menu card in advance.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q4. The CCPA's 2022 Guidelines to prevent unfair trade practices in respect of service charge in hotels and restaurants derive their legal force from which single specific provision of the Consumer Protection Act, 2019?

  • A. Section 21(2) of the Consumer Protection Act, 2019
  • B. Section 18(2)(l) of the Consumer Protection Act, 2019
  • C. Section 10(1) of the Consumer Protection Act, 2019
  • D. Section 2(47) of the Consumer Protection Act, 2019

Q5. In the CCPA's suo motu action of July 2026 against 41 restaurants for levying service charge by default, final orders were passed against seven establishments. The final order imposing a penalty of ₹50,000 along with directions to correct the billing system and refund charges already collected was passed against which one of the following?

  • A. Makhna Deli
  • B. Castle Barbeque
  • C. Fiesta by Barbeque Nation
  • D. Chaayos (Sunshine Teahouse Pvt. Ltd.)

Q6. The 2026 CCPA orders penalised restaurants for levying service charge 'by default'. In this context, levying service charge 'by default' precisely means which one of the following?

  • A. Automatically adding service charge to the bill without obtaining the consumer's express prior consent
  • B. Charging service charge only from consumers who default on leaving a voluntary tip
  • C. Collecting service charge as a default statutory tax that is remitted to the government
  • D. Applying a charge when a consumer defaults on an online food-delivery payment

Q7. Consumer complaints against service charge are routed through the NCH's INGRAM. In this context, INGRAM refers to which one of the following?

  • A. The Indian National Grievance Registration and Monitoring system, a portal used exclusively for e-commerce disputes
  • B. The Integrated Grievance Redressal Mechanism, an omni-channel IT-enabled portal linking consumers, regulators, companies and call centres
  • C. An adjudicatory module that passes binding orders on consumer complaints at the pre-litigation stage
  • D. An inter-departmental mediation platform operated jointly by the District and State Consumer Commissions

Q8. The National Consumer Helpline (toll-free 1915), through which the service-charge complaints were received, is operationalised by which one of the following?

  • A. The Ministry of Corporate Affairs, acting as the sole nodal agency for all consumer grievances in the country
  • B. The Department of Administrative Reforms and Public Grievances, which runs the CPGRAMS portal for consumer complaints
  • C. The Department of Consumer Affairs, Ministry of Consumer Affairs, Food and Public Distribution
  • D. The Ministry of Commerce and Industry, which exclusively regulates trade practices affecting consumers

Q9. In National Restaurant Association of India v. Union of India (decided 28 March 2025), while upholding the CCPA's 2022 guidelines, the Delhi High Court dismissed the writ petitions and imposed costs payable to the CCPA for consumer welfare of what amount on each petitioner?

  • A. ₹50,000 each
  • B. ₹1 lakh each
  • C. ₹5 lakh each
  • D. ₹10 lakh each

Q10. The service-charge guidelines whose validity the Delhi High Court upheld in 2025 are issued and enforced by which one of the following authorities?

  • A. The Central Consumer Protection Authority
  • B. The National Consumer Disputes Redressal Commission, the sole body empowered to frame all consumer-protection guidelines
  • C. The Competition Commission of India, the regulator for every unfair trade practice in the country
  • D. The Bureau of Indian Standards, which prescribes mandatory service norms for all hotels and restaurants

Q11. Under the Consumer Protection Act, 2019, which one of the following best describes the role of the Central Consumer Protection Authority (CCPA) as distinct from the Consumer Disputes Redressal Commissions?

  • A. The CCPA is the exclusive appellate authority over all orders passed by the District and State Commissions
  • B. The CCPA adjudicates every individual complaint valued above ₹2 crore, wholly replacing the National Commission
  • C. The CCPA and the Consumer Commissions are the same institution, the CCPA being its district-level tier
  • D. The CCPA is a regulator protecting consumers as a class that can act suo motu, while the Commissions are quasi-judicial bodies adjudicating individual disputes

Q12. Across the CCPA's clarifications since 2017 that culminated in the 2022 guidelines, 'service charge' levied by restaurants is best understood as which one of the following?

  • A. A statutory levy that restaurants collect on behalf of the government together with GST
  • B. A mandatory gratuity fixed by the Ministry that restaurants are required to share with their staff
  • C. A voluntary payment in the nature of a tip, distinct from any government tax, reflecting a service element already inherent in the menu price
  • D. A cess charged on food bills earmarked to fund the National Consumer Helpline