Thursday , August 24 2017
India News

Legal experts divided over service charge in restaurants

Legal experts divided over service charge in restaurants

New Delhi: Opinion appears to be divided among legal experts on the government’s approach on service charge in restaurants, with a section terming it totally “illegal and unfair” trade practice and the other favouring making the levy optional.

The debate on the issue has been raging since the January 2 notification of the government asking restaurants to put up notice making service charge optional.

Notwithstanding the directives of the Ministry of Consumer Affairs, restaurants have been making it mandatory for foodies to pay service charge between 5 and 20 per cent of the total bill.

The service charge, levied on the total bill, is in addition to the compulsory taxes like Value Added Tax (VAT), service tax and Swachh Bharat cess.

This is a “forced tip”, “illegal” and “unfair trade practice”, said noted consumer activist Bejon Misra whose view was shared by advocate Biraja Mahapatra.

“Service charge should be completely done away with. Hotels and restaurants inflate bills in the name of this charge which is absolutely illegal,” said Mahapatra.

Both of them strongly felt that the government should have brought a strict law to ban service charge instead of the notification making it optional for the consumer.

However, differing with them, senior advocate Sukumar Pattjoshi supported the government initiative saying, “Service charge should be made optional as it is like a tip which you may or may not pay.”

This, however, requires legal clarity which can only come from the judiciary and someone has to file a writ petition in this regard, he added.

Some restaurants when spoken to, confirmed that they were levying around 10-15 per cent service charge on total bills.

“Yes we are billing the service charge also,” one of the restaurant owners said when his attention was drawn to the notification that the service charge cannot be made mandatory.

PTI