‘Service Charge Is Not Mandatory’, You Can Report Here If You’re Insisted To Pay It
The purpose of paying service taxes in the restaurants has become a cynical subject from many months. Now with the introduction of GST, certain norms were clarified by the concerned authorities. Consumer Affairs and Food Minister Ram Vilas Paswan waived off those pale statements stating that the service tax is not mandatory and can be paid if the customer is willing to do so.
However, tax department considered the imposition of the service tax as a deed against the will of the customer, baiting the fundamental rights. Generally, the service tax ranges from 5 to 20 per cent and it is added to bills of customers can no more be made mandatory at restaurants. Back then, the Department of Consumer Affairs said that automatic applying of a service fee is the violation of fair trade practices.
Coming back to the state level matters, the central government has already urged the restaurants and hotels not to mention the service charge on the bill, they issued a statement saying that customer may pay it voluntarily whereas an unhappy customer may not pay any service fee.
Now with the implementation of GST bill, many people went sharing their first GST bills on Twitter and other networks. However, on some bills, it is still surprising to find a category of ‘Service Charge’. Many people aren’t aware of the thing that the whole taxation is included in the GST’s two subcategories: SGST and CGST.
Check out a Facebook post here:
Finally, the respective authorities have opened up on the situation and claimed that ‘Refusing to pay a service charge is legal; mandating a service charge is not.’ Since the very inception, restaurants are exploiting citizens in every possible way.
Hotels/Restaurants should not decide how much Service Charge is to be paid by the customer &it should be left to the discretion of customer.
— Ram Vilas Paswan (@irvpaswan) April 21, 2017
Guidelines are being sent to states for necessary action at their ends.
— Ram Vilas Paswan (@irvpaswan) April 21, 2017
Many people are not aware of this taxing phenomenon, meanwhile, some are denying to retaliate just because they are totally disinclined to fight against the restaurant people.
The regulations that came out in April of 2017 from the concerned departments have also stated:
“A number of complaints from consumers have been received that hotels and restaurants are following the practice of charging ‘service charge’ in the range of 5-20%, in lieu of tips, which a consumer is forced to pay irrespective of the kind of service provided to him. The Consumer Protection Act, 1986 provides that a trade practice which, for the purpose of promoting the sale, use or the supply of any goods or for the provision of any service, adopts any unfair method or deceptive practice, is to be treated as an unfair trade practice and that a consumer can make a complaint to the appropriate consumer forum established under the Act against such unfair trade practices. In this context, the Department of Consumer Affairs, Central Government has called for clarification from the Hotel Association of India, which has replied that the service charge is completely discretionary and should a customer be dissatisfied with the dining experience he/she can have it waived off. Therefore, it is deemed to be accepted voluntarily.”
“The Department of Consumer Affairs has asked the State Governments to sensitize the companies, hotels and restaurants in the states regarding aforementioned provisions of the Consumer Protection Act, 1986 and also to advise the Hotels/Restaurants to disseminate information through display at the appropriate place in the hotels/restaurants that the ‘service charges” are discretionary/ voluntary and a consumer dissatisfied with the services can have it waived off.”
Now that you’re aware of the story, double check the bill whenever you go to a cozy restaurant. Sometimes, they then try to convince the customer that it is part of the tax that goes to the government, as it is known that, the Union Finance Ministry clarified on July 14 that service charge has absolutely nothing to do with service tax. And it does not go into the government coffers; instead, it ends up in the restaurant owner’s pocket.
But, if the restaurant authorities are still forcing you to pay the service charge you must know that you can report the place at Customer Support Portal.