Eatery levies both GST & service charge, fined

Observing that levying service charge in addition to goods and services tax (GST) amounts to unfair trade practice, a consumer forum has ordered a Mumbai restaurant to pay a compensation of Rs 10,000 to a Ghatkopar woman after it refused to scrap the service charge it had levied along with GST.

Observing that levying service charge in addition to goods and services tax (GST) amounts to unfair trade practice, a consumer forum has ordered a Mumbai restaurant to pay a compensation of Rs 10,000 to a Ghatkopar woman after it refused to scrap the service charge it had levied along with GST.

Manisha Banavalikar submitted a complaint to the additional Mumbai suburban district consumer disputes redressal forum on April 7, 2018. In her plea, she said on October 14, 2017, her family had gone to Mini Punjab’s Lakeside restaurant for dinner and was billed Rs 2,142. According to her, while the food cost them Rs 1,650, the service charge at the rate of 10% worked out to Rs 165 and GST (18%) of Rs 326.

Banavalikar said when she brought it to the manager’s notice that the restaurant did not have the right to levy service charge, she was humiliated. She claimed the manager also told her to not visit again if she was unhappy with the service.

‘Service charge levy is unfair trade practice’

She said she paid the full bill. In the forum, Banavalikar submitted the bill and information from the website of the consumer affairs ministry. The restaurant submitted its reply and refuted the allegations. It said the complaint was false and without any basis.

The forum, though, ruled in Banavalikar’s favour, saying the restaurant had already charged her GST for the food and services. It said 18% GST is one part of the service charge and levying an additional 10% did not seem right. “Since this is wrong, the forum feels that it has been established that the restaurant had indulged in unfair trade practice,” it said.

The amount to be paid by the restaurant includes Rs 5,000 as compensation and Rs 5,000 towards the cost of the complaint. In addition, the restaurant will have to refund Rs 165. Banavalikar’s advocate Amit Pai said while settling the bill, she had specifically brought it to the notice of the manager that levying such service charge was illegal. “Hope this judgment serves as a deterrent to other restaurants that commit such malpractices,” he said.

Source:- https://retail.economictimes.indiatimes.com/news/food-entertainment/food-services/eatery-levies-both-gst-service-charge-fined/72658889