Admn looks away as restaurants levy illegal service charges

  • Vinod Kumar, Hindustan Times, Chandigarh
  • Updated: Sep 01, 2014 11:25 IST

As a large number of restaurants in the city are brazenly levying illegal service charges on consumers from the past many years, the Chandigarh administration continues to look the other way.

As per the rules of ministry of consumer affairs, service charge cannot be charged on food served at the table. Throwing norms to the wind, the restaurants have been fleecing consumers by charging money ranging from 6% to 12% on the bill.

Following directions from the ministry of consumer affairs, the administration had declared the practice illegal in 2006. However, with no check in place, several restaurants continued to indulge in the malpractice under the nose of the administration.

In 2012, city-based social activist Ajay Jagga took up the issue with UT administrator Shivraj Patil, who directed the officials to look into the matter. Subsequently, the UT home secretary asked the deputy commissioner-cum-commissioner of excise and taxation and consumer affairs to conduct an inquiry and submit a report. In the past two years, the home department has shot off eight reminders seeking status report, but all in vain.

When contacted, UT deputy commissioner-cum-commissioner of excise and taxation and consumer affairs Mohammed Shayin said he was not aware of the issue and would look into it.

By illegally charging service charges, the restaurants are putting additional burden on consumers, who already have to pay around 25% taxes in form of value-added tax (VAT) at the rate of 12.5%, service tax and luxury tax at the rate of 4.85% and 7.42%, respectively.

Criticising those indulging in this unfair practice, Chandigarh hotel association general secretary Ashok Bansal said the administration should take strong steps to curb this malpractice.

“The consumers are already reeling under heavy taxes imposed by the government. It’s totally unfair on part of the restaurants, who are levying service charges. They are cheating the consumers,” said Bansal.

He further claimed that they have instructed members of their association not to indulge in such activities.

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