Is it Legal for Restaurants to Add an ‘LPG Crisis Charge’ to Bills? Explained

A picture of a food bill went viral on the internet recently for a unique charge added to it. The image posted on r/bangalore subreddit showed a cafe levying 5% “Gas Crisis Charge” on the customer for an order that included two lemonades.

Since then, the internet has been divided on the ethics of this move. Some netizens believe that charging for gas crisis on an order that does not require LPG to be made is wrong. However, some believe that this is the only way some restaurants and cafes are able to keep their shutter open amid the LPG crisis.

But, is it legally permissible for restaurants to levy an additional LPG surcharge on customer bills? The answer to this question is slightly nuanced, as there is no specific law devised to decide on the gas crisis charge.

Yash Vardhan Singh, Counsel, Sarvaank Associates believes that the current wave of LPG surcharge is a classic example of businesses attempting to pass on operational volatility through legally unsustainable means. “While restaurants have every right to raise menu prices to counter the West Asia fuel crisis, they cannot surreptitiously tack on a cooking gas fee at the billing stage,” he said.

Is it Legal? Yes and No

A restaurant or cafe can levy the gas crisis charge on the customer in two ways- by either prior disclosure of the charge or direct addition to the bill.

If a restaurant discloses the charge before the billing stage and keeps it voluntary for the customer, it is considered legal. However, if the customer becomes aware of the additional charge only when the bill is presented, it moves from the realm of commercial freedom into the domain of consumer protection law.

In simple terms, the law permits recovery of cost, but insists on transparency, consent, and upfront disclosure.

Rishabh Gandhi, founder of Rishabh Gandhi and Advocates explained the legality of this issue, stating, at first principles, a restaurant is free to determine the price of its food. However, “If LPG prices rise, nothing in law prevents a restaurant from revising its menu prices to absorb or pass on that cost. However, the legal issue is not about pricing, but about how that price is presented and recovered. The moment a restaurant adds a separate, compulsory “LPG surcharge” at the billing stage, the matter moves from commercial freedom into the domain of consumer protection law,” he said.

Which Law Governs LPG Crisis Charge?

The imposition of an undisclosed LPG surcharge primarily falls under the Consumer Protection Act, 2019. Specifically, Section 2(47) defines an “unfair trade practice” as any deceptive or misleading method used to promote the sale of goods or services.

This definition includes hidden charges, misleading pricing structures, and the imposition of costs that were not transparently disclosed to the consumer upfront.

In 2022, the Central Consumer Protection Authority (CCPA) issued binding guidelines that further reinforced these consumer rights.

Varun Katiyar, Advocate at Chambers of Varun Katiyar explained these guidelines thoroughly. He stated, although originally directed at “service charges,” these guidelines established a key principle: no establishment may impose a mandatory charge, regardless of its nomenclature without the explicit consent of the consumer.

The law prioritises substance over form in such matters. Simply relabelling a fee as an “LPG surcharge” does not change its legal status if the charge remains compulsory and undisclosed. A forced LPG surcharge, therefore, functions as a disguised mandatory fee, directly contradicting the CCPA’s mandate that pricing must be transparent and consensual.

Tushar Agarwal, Founder and Managing Partner at C.L.A.P. Juris, Advocates & Solicitors, stated that any LPG surcharge added to a restaurant bill without prior and clear disclosure is likely to be classified as an unfair trade practice under the Consumer Protection Act, 2019.

“The law is settled that consumers are only obligated to pay the listed menu price and applicable taxes. Any additional levy—whether termed a service charge, facility fee, or LPG surcharge—cannot be imposed mandatorily or retrospectively. Consumers are well within their rights to refuse such charges and seek redress before consumer authorities,” he said.

Is it Comparable to Service Charge?

The LPG surcharge is closely comparable to the earlier controversy around mandatory service charges in restaurants, where the CCPA issued guidelines prohibiting establishments from levying such charges by default.

This position was subsequently tested before the Delhi High Court, which upheld the regulatory stance and clarified that such charges cannot be imposed as a matter of compulsion.

The reasoning was instructive: once a customer selects an item based on its displayed price, any additional compulsory levy, unless voluntarily agreed to, is inconsistent with consumer rights.

“Authorities and courts would not focus on the label ‘LPG surcharge,’ but on its character—whether it is disclosed upfront, whether it is optional or mandatory, and whether the consumer agreed to it before placing the order. If these elements are absent, the surcharge is likely to be treated on the same footing as compulsory service charges—impermissible and refundable,” Gandhi said.

Similarly, Ekta Rai, Advocate at the Delhi High Court, explained, “A service charge relates to staff service and has been specifically addressed in government guidelines, which state it cannot be mandatory. An LPG surcharge, on the other hand, is a cost-recovery component and not expressly regulated, but it still falls within pricing transparency norms. In both cases, a lack of prior disclosure or the element of compulsion can render the charge legally questionable.”

The approach adopted by Indian courts and regulators in the service charge case provides a clear framework for how the LPG surcharge issue is likely to be assessed.