Now Paying Service Tax In Hotels/Restaurants Is Not Mandatory

The Ministry of Consumer Affairs
The Ministry of Consumer Affairs

We all go to hotels and restaurants very often and customers are liable to pay service tax no matter if they like the service or not provided by the hotel staff. To solve this problem the Department of Consumer Affairs took a big decision that all the Restaurants and Hotels are advised not to add additional charges in the form of service tax on customers.  It is purely customer’s wish to pay service tax only if they like the service being provided to them by the hotel/Restaurant staff.

Service charges in hotels are not compulsary
Service charges in hotels are not compulsory

The service charges applied on the total bill are now optional and it is completely customer’s wish to pay the service charges or not to pay it at all, the department of consumer affairs said on Monday. The department of consumer affairs has received many complaints against the hotel association from the customers in last two years and they have come to this decision that paying service tax is entirely customers wish. Since the restaurants have been imposing the service charges to the customers without customer’s consent will now have to ask the customer if he wishes to pay the service charges or not.

Under the Consumer Protection Act, 1986 explains the trade practice in which it is mentioned that the purpose of promoting the sale, use and the supply of goods or for the supply of any service, using any unfair methods or disingenuous practice, is to be treated as an unfair trade of practice. Referring to the Act, the department of Consumer Affairs added that if a customer is dissatisfied with the service then he can launch a complaint against it in a consumer forum established under the Act to deal such unfair trade practices.

The department of consumer affairs has received many complaints against the restaurant association that restaurants were charging 5% to 20% additional amount in the bill in lieu of tips, which a customer is forced to pay irrespective of the service the restaurant is providing to its customers. Following the complaints, the department of Consumer Affairs has asked for the justification from the Hotel Association of India, which have replied that the service charge which they apply is completely nonobligatory and if a customer is dissatisfied with the food or with hospitality the hotel is offering then they can waive it off. Therefore it is presumed to be accepted voluntarily.

The chairman of the legal matters sub-committee of the Federation of Hotel and Restaurants of India Mr. Pradeep Shetty will now examine the facts and figure of the legal point and then will send the correct representation to the Department of Consumer Affairs.

Well, we can not say that when this legal issue will be sorted out between the Department and hotel association but as long as the service tax deduction is concerned every customer is happy and wish it to continue.