Food bills: The big fat lie of ‘service charge’
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What happened to Ajay Kumar Goud happens to all of us! Just like him, out of sheer ignorance with respect to rules pertaining to levying of Service Tax and due to morphed terms like “service charges”, customers are led into believing that these are mandatory charges being levied with money going to the government.
However, that’s not the case. You might have been fleeced on your food bills all this while by leading star hotels and prestigious food joints on the name of “service charges” not made clear to consumer while ordering from the menu.
Mr Goud ordered a paneer dish from one of the food joints of a leading restaurant chain here. “Menu rate said Rs 135. However, to my utter surprise the bill had three components including rate Rs 135, VAT @14.5% and service charges @10%. Interestingly, while I was told that it was because of high level of service and ambience. The said food joint is a self-service outlet, where I paid for dish at counter, held token for 10 minutes and then carried my dish to the table and even made to pay 10 per cent for doing all this,” he said, adding, neither the hotel authorities nor government officials from local bodies could legitimise this service charge levied on discretion of hotels with varying percentages and absence of a prominent display in main menu, where it goes unnoticed by customers.
Interestingly, this is a regular practice while there is no governing body for such “service charges”. Mr Goud even approached the Comm-ercial Tax authorities in this regard where he got to know that “service charge” is an issue between the hotel and the consumer, while “service tax” is governed by clearly laid out rules.
An official said that with respect to services provided in serving of food or beverages by a restaurant or food joint, service tax can be levied only by those joints which have the facility of air-conditioning or central air-heating in any part of the establishment, at any time of the year, and which has a license to serve alcoholic beverage. “You will be liable to pay service tax only if you are sitting in an area earmarked for serving alcoholic beverages with food,” said the official.
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