Residents find service charge hard to digest

The levying of service charge by restaurants and eateries has become a topic of debate. While the UT is yet to take a decision on it, hoteliers are justifying it on the basis of a recent consumer forum order. Chandigarh Tribune asked its readers what needs to be done to solve the problem

The proceeds of service charge are retained by restaurants or eateries. Consumers think that service charge is collected as tax on the behalf of the government. It is not a service tax and the customers are being duped. It is nothing but an organised way to collect tips for waiters and the other hotel staff. Customers should always inquire about the charges levied by a hotel or restaurant before ordering food. In case it is unavoidable, then there is no need to give a tip.

Raj Kumar Kohli, Chandigarh

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Consumers should have right to refuse 

Consumers should have the right to refuse it if the services fall below a reasonable standard. A voluntary payment in the form of a tip is a better option that is given in addition to the amount of the bill as a reward to the hotel or restaurant staff. All restaurants/hotels/eateries should be categorised according to the quality of services these render.

Dr Amit Gupta,  Mohali

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Eating joints should display charges  

If we are availing any facility, then there should be no hesitation in paying for that.  However, the Administration can regulate such charges  depending upon the rating of an eating joint/restaurant.  All restaurants should display the rate of service charge. If it burns a hole in your pocket, it will be better to avoid such eating joints/restaurants.

Rajiv Sood, Chandigarh

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UT left with no option but to approach higher court

Till the consumer court judgement upholding the service charge came, service charge was declared illegal and against the policy of the UT Administration. But now the Administration is left with no other option but to contest the judgement in a higher court so that the general public is saved from the burden of service charge.

HBS Batra, Mohali

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It is duty of eateries to serve customers   

It is the duty of hotels  and restaurants to serve the customers in a proper way. If they are charging service charge, then why they impose sales tax? The eateries should charge only one of the taxes.

RK Kapoor, Chandigarh

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City Admn should seek clarification from Legal Dept   

Owners of restaurants and eateries are interpreting  the  judgment of the  consumer forum in their own way. They levy service charge in addition to the MRP printed on packed items. Thus, they are exploiting  the consumers by adopting unfair trade practices. It would be appropriate in the interest of all that the Chandigarh Administration seek a clarification from its Legal Department on the issue and take an appropriate decision  to save consumers from the exploitation.

AS Ahuja, Chandigarh

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Restaurants fleecing people

Restaurants are fleecing customers by imposing service charge. The proceeds from it are retained by the restaurants. It is not a service tax imposed by the government. In spite of the Administration declaring it  illegal, eateries are throwing the norms to the wind. Owners of restaurants claim that it is legal. The Administration needs to take a clear stand on the issue to protect customers from being exploited by eateries.

Capt RS Bhalla, Chandigarh

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Inspect eateries regularly

As per law, VAT is supposed to be levied only on 60 per cent component of the bill amount. But in reality, many hoteliers and restaurant owners are collecting it over and above VAT and service tax on 100 per cent  of the bill amount. Undoubtedly, its imposition in the name of a tip by hotels, restaurants and other eateries burns a hole in the pocket of consumers. In fact, taxes like VAT and service tax paid by consumers directly go to the government but the service charge is being illegally pocketed by the owners themselves. At the same time, the Chandigarh Administration should regularly inspect the eateries to check the practice of inflated bills.

Hardeep Singh Slaich, Mohali

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A burden on people

Residents are already paying house tax, water tax and a score of other taxes. Now, they have been forced to pay service charge, which is a double whammy for them. 

Ramesk K Dhiman,  Chandigarh

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Apex court upheld its validity

Restaurants and other eateries collect service tax  on the bill amount after including service charge in  it. Thus, confirming its  “legality”.  A five-judge bench of the Supreme Court  has already declared it legal. However, these orders can be  overlooked either by  the Union Cabinet or a 11 judge Bench of the Supreme Court.  In the absence of any stay order issued by a competent authority, nothing can be done and the present consumer court orders will have to be followed.  Moreover,  the Ministry   of Finance’s notification of February, 2011, justifies its imposition. So, restaurants and eating joints in Chandigarh are right in charging it.

Paras R Kalotra, Mohali

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Eateries should not fleece customers 

The levy of service charge by eateries is putting an additional burden on consumers who already pay around 25 per cent tax in the form of VAT (12.5%), service tax (4.85%) and luxury tax (7.42%). According to the Excise Department, service charge is not a government tax and is pocketed by restaurants. The eateries should not fleece customers.

Nikita Kapur, Chandigarh

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Take appropriate legal measures 

People visit hotels and restaurants to relish food under a congenial environment. Generally, the charges for  food are far higher in comparison to the dhabas or small eating joints and it also include the cost for providing better services. So,  the levy of service charge is a burden on customers. It must be checked through appropriate legal measures by the UT Administration.

Janeshwar Kumar Jain, Chandigarh

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Maintenance cost passed on to customers

The imposition of service charge by restaurants and  eateries  is illegal. The Administration should have ironed out the issue meticulously and got it vetted from Legal Department. The public is already paying VAT and service tax. The eateries or restaurants wisely shifted the maintenance cost to innocent people, which is not admirable.

Bhupinder S Sealopal, Mohali

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Overcharging by eateries

Many hotels and restaurants are already overcharging by imposing a number of taxes, which has no legal sanction and validity. Surprisingly, an additional tax is being charged in the name of service charge, which has been made mandatory against the public wishes. This issue was first raised during the first VAT Advisory Committee meeting under the chairmanship of Mohammed Shayin, Excise and Taxation Commissioner, but the illegal practice continues. There is a great resentment among the public over the issue.

Jagdishpal Singh Kalra, Chandigarh

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Comment
Rajmeet Singh*

Scrutiny by government a must

With the Chandigarh Administration seeking a legal opinion on the imposition of service charge by hotels and other eating joints and the hoteliers justifying it on the basis of a consumer court judgement, the issue has come to the public domain.

Are the hoteliers justified in charging the service tax without being graded for the quality of services they render or an there is need of intervention by the Consumer Affairs Department to stop the practice? In the backdrop of the Consumer Affairs Ministry coming up with the Consumer Protection Act-2015 (overriding the 29-year-old Consumer Protection Act) that seeks to set up a regulatory authority to tackle unfair trade practices and redress the consumer grievances expeditiously, the issue service charge becomes relevant.

The most debatable point is that while the local authorities need to grade the restaurants and the eating joints as per the quality of services these render, there should be a grievances redress mechanism wherein any consumer, after enjoying the services, should have the right to raise objection to the quality of services, if it is not up to the mark. The quality of services should include food and general hygiene.

While consumer right activists described service charge illegal and arbitrary, owners of restaurants and eateries quote the Ministry of Finance notification of February 2011 to justify the legality of service charge. It is matter of fact that the Ministry of Consumer Affairs needs to clarify on it as it is an issue that concerns the whole country.

As per the law, VAT is supposed to be levied only on 60 per cent component of the bill amount. But in reality, many hoteliers and restaurant owners are collecting service charge in addition to VAT and service tax on 100 per cent of the bill amount.

To levy service charge, the hoteliers quote a show-case notice of the UT Excise Department wherein they were asked to explain why service charge should not be included in their gross income. But the fact is that taxes like VAT and service tax paid by the consumers directly go to the government while the service charge is being illegally pocketed by the owners themselves and are not being paid to the government.

When consumers are completely covered under the Consumer Protection Act, levying of any charge in the name of service should also be under the scrutiny of the government. There has to be an element of transparency and regular monitoring of it by the authorities.

At the same time, the consumer also needs to be aware of his rights and should ask for the bill after availing the services at an eating joint.

*The writer is Chief City Reporter