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Restaurateurs say nothing illegal about service charge

chandigarh Updated: Aug 23, 2015 00:40 IST
HT Correspondent
HT Correspondent
Hindustan Times
Service tax

Even as the UT administration is taking legal opinion on the sanctity of service charge, the Restaurants' Association of Chandigarh, addressing mediapersons on Saturday, said that there was nothing illegal about service charge and they are well within their right in levying it.

Manmohan Chadha, a representative of the association, said: "There is a lot of confusion regarding the levy of service charge and questions are also being raised on its legal sanctity. But a five-judge bench of the Supreme Court (SC) has already ruled that there is nothing illegal about service charge."

Chadha said that only the Union cabinet or a bench of 11 SC judges could overrule this order.

"Till this is done, the UT administration cannot declare service charge illegal,"he said.

The association which has about 130 members relied on the notification issued by the Union ministry of finance in February 2011 while justifying levying of service charge. An association representative said, "The ministry has clarified that the restaurants levy service charge and this amount forms a part of the services provided and is to be included in the bill for levying service tax."

Chadha said, "Once service tax is levied on service charge, how can it be illegal? Service charge is charged on the food served on the table, and when it is clarified on the menu card that service charge would be extra, the customer has the choice of getting the food packed."

Taking about the Union finance ministry's clarification stating that service charge is not a government levy, Chadha said: "No where the ministry says it is illegal."

UT administration drawing action plan

To clear air over the issue, the UT administration is taking legal opinion and is in the process of drawing an action plan to check harassment of residents.

"Service charge is not a government levy; thus we cannot allow restaurants and eateries to charge it. In this regard, we are in the process of creating a legal framework to check the practice. Within a week, we will be ready to curb it,"said deputy commissioner SB Deepak Kumar, who is also the food, supplies and consumer affairs director.

State commission gives relief to Nandos

Giving relief to Nando's Sukhmani Enterprises in Elante Mall, the state consumer disputes redressal commission, Chandigarh, while accepting their appeal, overruled the consumer forum order directing the eatery to pay `12,137 to a Kharar resident for levying a service charge of `137.

The consumer commission held: "The restaurants/eateries can levy service charge from the consumers. Therefore, the district forum fell in to a grave error in allowing the complaint of the complainant and wrongly directed the opposite party to refund the amount of service charge. When the opposite party was entitled to levy service charges, there was no question of awarding compensation on account of alleged deficiency of service and cost of litigation."