Eatery fined Rs 15,000 for levying service charge
The district consumer disputes redressal forum, Chandigarh, has held service charges added to restaurant bills as illegal and directed a Sector 17-based restaurant to pay Rs 15,000 as compensation to a SAS Nagar resident.chandigarh Updated: Dec 10, 2014 10:18 IST
The district consumer disputes redressal forum, Chandigarh, has held service charges added to restaurant bills as illegal and directed a Sector 17-based restaurant to pay Rs 15,000 as compensation to a SAS Nagar resident.
Disposing of a complaint filed by Amandeep Singh, a resident of Sector 69, SAS Nagar, the forum directed Sector-17 based company, Aakash Restaurant and Food Private Limited (a franchisee of Shree Rathnam) to refund Rs 11 (Rs 10.7 paise) taken from the complainant as service charge. Besides, the restaurant would also pay Rs 10,000 as the cost of litigation.
The forum, presided over by Rajinder Singh Gill, on December 2, held, “Even though the statute does not provide for levy of any service charge, the restaurant has taken the amount of Rs 10.7 as service charge from the complainant, which according to it, is for the food items consumed and for the services availed. The government has authorised the restaurateur to charge the service tax @4.94% on 40% of the bill amount. So, in our opinion, if the restaurants are charging any other illegal tax, it amounts to unfair trade practice.”
It added, “There is no doubt that a gullible consumer might have lost considerable amount in paying extra money on restaurants bills, just because he/she does not understand what service charge, service tax and VAT actually mean.”
“Throwing norms to the wind, restaurants have been fleecing customers by charging 5% on the bill. Service charge cannot be levied on food served on the table.”
Amandeep, along with his family, had dinner at the restaurant on June 24 this year and ran up a bill of Rs 214, which included service charges of Rs 10.7. When questioned, the restaurant claimed that amount so collected was for the waiters. He paid up reluctantly and then approached the forum.
Before the forum, the restaurant, denied any deficiency and claimed that it was a franchisee of Shree Rathnam and that the levying of service charge was clearly mentioned in the menu card and was charged only for services availed by the complainant. It submitted that there was no law in the country which provided that services should be provided for free to a customer.
Instead, the customer was blamed. They claimed there was no unfair trade practice in levying the service charges to the extent of 5% of the bill amount for the services provided by it to the complainant, who had availed those services.