People in a fix as consumer fora differ on service charge

Aneesha Sareen

Tribune News Service

Chandigarh, November 18

The recent orders passed on the issue of levying service charge by eateries have left consumers confused as the two consumer disputes redressal fora have passed contradictory orders on the issue of the legality of service charge.

While the UT Consumer Forum I, presided over by its president PL Ahuja, had recently dismissed three complaints against different restaurants and held that the service charge was legal, the UT Consumer Forum II, presided over by its president Rajan Dewan, held that the service charge was illegal and also allowed a complaint against the Swagath restaurant directing it to pay Rs 10,000 compensation, leaving consumers in a fix.

Earlier, the UT State Consumer Disputes Redressal Commission had upheld the validity of the service charge in its August 14 order passed in favour of Nando’s restaurant and had accepted its appeal. In this order, the commission had categorically held that the district forum erred in allowing the complaint and the order passed by it suffered from illegality, warranting the interference of the commission.

The commission had then relied upon a judgment of the Delhi High Court which held that charging prices for mineral water/soft drink in excess of the MRP printed on packages during the service of customers in hotels and restaurants did not violate any provision of the Consumer Protection Act as the persons entered hotels and restaurants to enjoy ambience available therein.

The commission also held that the transaction, in question, in which the appellant levied the service charge, took place on October 10, 2014, when the instructions of the Chandigarh Administration dated October 31, 2014, had not come into existence. Even these instructions of the Administration stood superseded vide UT Excise and Taxation Commissioner’s memo dated February 24, 2015, which stated that those running the business of restaurants/eateries are directed to show cause why the service charge levied and collected by them from consumers over and above the bill for food should not be included in the gross turnover and taxed accordingly as per the provisions of the Act.

Following this, the UT had constituted a committee, which is inspecting hotels and the notification on the service charge has not been issued so far, resulting in the confusion.

UT Admn to blame: Advocate

Pankaj Chandgothia, president of the Chandigarh Consumer Courts Bar Association, blamed the Administration for the quandary. He said the Administration should pass a specific order addressing this issue. Even the HC had said in its order that “the respondents may, if statutorily permitted, examine the question of levying service charge by restaurants over and above the service tax.” “The contradictory order of the district forum has come primarily because Swagath restaurant was proceeded against ex parte and no defence was raised by it. As a result, the latest circular and order of the state commission were not brought to its notice and thus escaped its attention, he said.