Customers used to think that the service charges is charged by the government including other taxes and VAT.
Many restaurants and hotels are misleading their customers stating the order from 2022.
We have often seen restaurants and hotels imposing service charges even after including GST in the bill. There have been various incidents where restaurants have pressured their customers to pay a certain charge over and above GST. Recently, a customer refused to pay an extra service charge to a Noida-based eatery and it led to a chaotic fight.
Though many consumers are not aware that service charge is optional and the customer is only liable to pay if they want to. According to consumer rights, the customer can complain about the restaurant if they pressurise to charge service tax.
Many restaurants and hotels are misleading their customer stating the order from 2022. Regarding this, recently consumer forum has tweeted that no restaurant can pressurise any customer to pay service charges based on a 2022’s order.
The Delhi High Court on April 12, 2023, also stated the same thing. Justice Pratibha Singh also stated in her judgment that no restaurant can pressurise their customer on 2022 orders. Regarding this, the consumer forum also tweeted stating the same.
Service Charges:
It is an amount the restaurants impose on the service they provide to their customers. This amount is received directly by the restaurant. Though most restaurants and hotels make their menu including the charges and that’s why the customers are required to pay only the GST. Few consumers were unaware that they are not liable to pay such charges after GST was introduced.
Many customers started to question that they are paying 18% of GST, so why pay extra service charges? Customers used to think that the service charges is charged by the government including other taxes and VAT.
After this, the Central Consumer Protection Authority (CCPA) stated that service charges are not imposed by the government and announced a complete banned on service charges on July 4, 2022.
The CCPA released a guideline stating the policies of the restaurant. Any hotel or restaurant cannot charge an extra amount to their customers and if only the customers like their service are liable to pay a tip, and chose the amount of the same.
The guidelines stated:
Hotels and restaurants cannot charge any service charges.
It cannot be collected in any other name.
Restaurants or hotels can’t impose any ban on customers from entering the premise and also not pressurize any customer to pay any amount.
After imposing GST they are not liable to put any other charges on the bill.
The CCPA mentioned “Restaurants already include service components in their food and beverages. Food is priced in such a way that it covers the whole cost of goods and services. There are no restrictions on the pricing of hotel and restaurant products. When a customer orders an item from the menu, he agrees to pay the amount listed on the menu plus taxes. Anything above that would be considered unfair trade practice”.
High Court’s Verdict:
Delhi High Court had relieved the ban imposed on service charges by CCPA but also mentions that no restaurant or hotel can force any customer to pay any charges. They are not allowed to charge anything without the consent of the customers. The authorities must be transparent regarding the charges applied to the bill. It is also noticed that most of the restaurants are not transparent about the charges and the staff are not bothered to mention it to the customers before billing.
The Delhi High Court made it clear on April 12 2023 that the restaurants cannot impose charges based on the 2022 verdict. It stated that they are not in support of the restaurants regarding the collection of any charges.
If you are charged from the hotel, do this:
If you notice extra charges on your bill, talk to the manager and ask them to remove the imposed charges. If they deny to remove it and force you to pay for it, keep a copy of the bill and complain bout it in the consumer forum.
How to file a complaint:
Simply visit the official website of the consumer forum and register your complaint along with the bill, and the rest will be taken care of by the forum department.
It is important to be aware of your rights. Certain restaurants are mentioning that they charge 10% service charges but that doesn’t make it mandatory for you to pay it. It is simply a kind of tip which you can give if you want.
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