Rs 12,000 compensation for collecting Rs 137 service charge

  • Shailee Dogra, Hindustan Times, Chandigarh
  • Updated: Jul 05, 2015 23:55 IST

"Service charge cannot be levied on food served at the table," ruled the district consumer disputes redressal forum, Chandigarh, while holding NANDO's Sukhmani Enterprises (a franchise of Nando's), Elante Mall, guilty of resorting to unfair trade practices by collecting service charges from its customers.

Disposing of the complaint filed by Gurinder Singh of Sector 69, SAS Nagar, the consumer forum presided over by PL Ahuja, directed NANDO's Sukhmani Enterprises to pay Rs 12,000 as compensation for mental and physical harassment to the complainant and towards the cost of litigation.

"NANDO's had resorted to unfair trade practice in collecting the excess amount and had failed to return the same, which resulted in mental agony and harassment to the complainant," ruled the consumer forum, while directing NANDO's Sukhmani Enterprises to refund Rs 137.55 charged as 'service charge', which the consumer forum termed "illegal".

In a strong worded judgment, the consumer forum said, "NANDO's has been fleecing customers by charging money @7% on the bill as service charge. By levying service charge illegally, the restaurants are putting additional burden on the consumers, who already have to pay around 25% taxes in form of Value Added Tax (VAT) at the rate of 12.5% and Service Tax at the rate of

The forum presided over by PL Ahuja said, "Even though statute does not provide for levy of any service charge, the eatery has taken the amount of Rs 137.55 as service charge, which, according to it (NANDO's) is a payment for the betterment of the establishment and employees. We do not find any merit in this contention as there is nothing on record to substantiate this fact."

The complaint

On October 27, 2014, Gurinder Singh, along with his family, had lunch at NANDO's and the actual bill was Rs 1,965. When Gurinder went to pay the bill, he was asked to pay an additional amount of Rs 137.55 towards service charges. Initially Gurinder declined to pay the service charge, but he had to pay the amount. Later, he moved the consumer forum.

In defence, the NANDO's pleaded that it was well within its right to charge service charges and the same was conspicuously displayed on the menu as well as other places within the establishment.

Ambiguous affair

The Punjab and Haryana high court had left it to the UT administration to take a call on levying of service charge by restaurants.

The UT administration issued show-cause notices to the restaurants asking them to explain why they should not be charged tax on the service charge they were collecting. Following this notification, many of the city restaurants started charging service charge with the contention that they are paying tax on it.

But the issue of 'service charge' being levied at all, comes under the jurisdiction of the consumer affairs department which could declare it as illegal or a "restrictive trade practice" but the department has so far been silent on the issue.

"There is a lot of ambiguity on the issue and the administration has failed to make the picture clear so that the residents don't end up paying more," said city-based lawyer Ajay Jagga.

All efforts to contact Chandigarh DC SB Deepak Kumar failed as he didn't respond to the phone calls.

When charging service charge cost dear

In April 2015, the consumer forum had directed Amalgamated Bean Coffee Trading Company, which runs Café Coffee Day at Elante Mall, to pay a compensation of Rs 12,000 to a Sohana resident, Lovepreet Singh, for forcing him to pay service charges of Rs 5.94.

In November 2014, while disposing of a complaint filed by a Kharar resident, Gurdeep Singh, 23, the consumer forum had directed Amalgamated Bean Coffee Trading Company, which runs Café Coffee Day at Elante Mall, to pay a compensation of Rs 3,000 for levying service charges of Rs 8.19.

In December 2014, consumer forum had ordered a Sector 17-based company, Aakash Restaurant and Food Private Limited (a franchisee of Shree Rathnam) to pay Rs 15,000 as compensation to a SAS Nagar resident, Amandeep Singh, for charging Rs 10.7 as service charge.

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