Earlier there were discussions on the purpose of paying service taxes in the restaurants. 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 the act 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. On Monday, Department of Consumer Affairs said that automatic applying of a service fee is the violation of fair trade practices.
Already state governments have been asked to communicate to restaurants and hotels that service charge is not mandatory but a customer may pay it voluntarily whereas an unhappy customer may not pay any service fee at all.
According to the sources, the Hotel Association of India has also confirmed that service charge is discretionary and the Department of Consumer Affairs has pressed upon making customers as well as hotel and restaurants aware about this provision in the Consumer Protection Act, 1986.
“Restaurants (sic) are billing service charges in addition to taxes. Service charge is optional. A consumer has the discretion to pay or not,” tweeted the minister Minister Ram Vilas Paswan.
The entire statement denotes:
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 have 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.
The above statements express the flexible gait of govt in providing favourable ordinances to the common people. Now when it comes to the restaurant owners and employees, the table turned up divergently.
Meanwhile, National Restaurant Association of India (NRAI) issued a statement requesting the consumer affairs department to proceed the modifications and reconsider the service tax stating it as mandatory and not optional. that “customers were free not to eat at a restaurant if they did not wish to pay the service charge levied by it.”
The statement declared “customers were free not to eat at a restaurant if they did not wish to pay the service charge levied by it.”
Individual restaurant employees and restaurateurs firmly condemned the govt’s activity.
NRAI President Riyaaz Amlaani said “The act stops us from indulging in any unfair method or deceptive practice. We clearly mention the service charge we levy on our menus. We are not indulging in any unfair trade practice,” he said, adding that they were employee incentives distributed evenly among the workforce.
“This is all part of a bill on which the restaurants pay VAT while the employees pay income tax. It also does away with cash tips” said Amlaani.
Condemning the lifting of service charges a restaurateur said “The diner might say the entire meal was nice but the salad was bad. What are we supposed to do in such a scenario? Most complaints we receive are about higher taxes and not the service charge. The government didn’t waive taxes but waived service charge that diners happily paid,” he claimed. Yes! his opinion is quite considerable.
Manu Chandra, Chef and restaurateur who runs Monkey Bar outlets across India, said that the restaurant might hike the prices of the food if the fluctuations in service charges are carried out. “Rentals, competition and salaries are rising. The restaurants will have to take a couple of days to work on alternate ways to meet these costs,” Chandra said.