It’s official: Service charge illegal

Ramkrishan Upadhyay

Tribune News Service

Chandigarh, April 1

You will now end up paying less for your food in hotels and restaurants as the Chandigarh Administration has banned the levying of service charge by eateries.

Deputy Commissioner Ajit Balaji Joshi has issued an order to this effect under Section 144 of the CrPC for two months.

Levying of service charge will be treated an offence and owners of restaurants and hotels found violating the order will face action, including an FIR and jail term.

At present, consumers in the city have been paying service charge in addition to service tax and VAT.

The Centre charges 5.9 per cent service tax on the total bill while VAT is charged by the Chandigarh Administration at the rate of 12.5 per cent.

While both these taxes go to the government, consumers were being asked to pay service charge by restaurants for the services rendered to them.

In the absence of any guidelines, the charges varied from 5 per cent to 20 per cent, depending upon the restaurant.

The Deputy Commissioner said there was large-scale resentment among consumers against service charge. “This levy, which is not supported by law, tends to bring about a manipulation in the price in such a manner so as to impose unjustified costs on the consumer,” he said.

What the order states

“The levy of service charge by hotels/restaurants/ eateries is clearly a restrictive/unfair trade practice under the Consumer Protection Act, 1986, and being without any sanction of law, must be discontinued in public interest.”

Where to complain

People  can file complaints  regarding levying of service  charge in the  offices of the  Deputy Commissioner,  SDMs or the  Food  and Supplies  Department. Complaints can also be filed on the Facebook  page of the DC’s office.