How you are cheated or rather fooled at restaurants ?

Rupang Bhatt, Surat

A Facebook post from Surat, Gujarat has over 8,000 shares in 10 days.

The post is about how restaurants cheat customers or rather make them fool by levying ‘Service Charge’ which is not Service Tax.

Those who don’t have habit to read the bill before paying it, or those who can’t understand the difference between Service Tax and Service Charge are the victims of trap these restaurants lay.

Following is the Facebook post that has been widely shared:

Facebook post by Shreya and Hitan Talati in Surat

BE AWARE!

Kindly spare a minute to read this.

Well, I went to “HAVMOR” restaurant yesterday night at adajan.

We were around 17-18 people.

Forget about the food quality, it wasn’t up to the expectations.

Service was slow too (not objecting because of a festive day).

Then came the bill.

Not everyone would have realized about the difference between service tax and service charges.

Yes, we have to pay service tax, but service charges? WHY? Its like we have to pay a tip which is also decided by the restaurant.

This is like a trick to fool the people who don’t bother to check the bill properly and pay it blindly.

Later when we went to talk to the manager, after a lot of disputes which took place for like 10 mins, he then said “Sir, lets end it. If you dint like the service then let it be. We will not take it from you”.

So what about others who have paid till date and who will still pay?

Well, Next time, I will definitely not prefer such a restaurant where I am being fooled.

Who pays 700 as a tip for the service being slow and half of the food served by ourselves?

This really didn’t make sense to me because not everyone would have noticed it.

Not everyone would hAve fought for this and not paid. Its high time, we should’nt let such restaurants fool us.

LIKE AND SHARE as much as possible.

Thank You

(Facebook post ends)

Additionally there are other methods too, attempted to fool the customers at restaurants:

– You order food, and menu is taken away from your table. You ordered the food as per the price mentioned in menu. But while paying for it you don’t check whether the price in bill is same as price in menu.

– You don’t check the items mentioned in bill and straight away read round total before issuing payment. You are potential to fall in trap. You need to check the items. There’s possibility of some addition or replacement to make bill higher. If you find out something like this and lead attention of staffer, he would smile and behave like it was a mistake. Well actually it’s not a mistake. The staff do this selectively. If someone is no foolish, do admit a mistake. If someone is fooled succesfully, count the money.

– You don’t count the round total of prices of items you ordered in bill. There are number of restaurants that do jugglery in numbers. Most of the customers don’t bother to try mathematics after lunch/dinner. They are fooled.

Couple of articles from recent months in which government made clarifications over Service Tax

Service charge collected by hotels is not service tax, Finance Ministry clarifies

New Delhi, PTI, 15 July, 2015

The government today clarified that “service charge” collected by certain restaurants and hotels is not “service tax”, which is levied at a rate of 5.6% on the total bill.

In a statement, the Finance Ministry said some hotels, restaurants and eateries, besides charging for the food and beverages, are also levying “service charges” in their bills which are retained by them.

Some of the consumers have a misapprehension that these “service charges” are being collected by the restaurant on behalf of the government as tax, it added.

“It is clarified that these ‘service charges’ collected by the restaurants/hotels/eateries are retained by the restaurants/hotels/eateries and are not ‘service tax’ imposed by the government,” the Ministry said.

In case of air-conditioned eateries and hotels, the service tax at the rate of 14% is charged only on 40% of the bill amount.

The effective service tax rate in respect of services provided in relation to serving of food or beverage by a restaurant, eating joint or mess having the facility of air–conditioning or central air-heating in any part of the establishment is 5.6% of the total amount charged.

The government had increased the service tax rate to 14% from 12.36% (including education cess) from June 1.

Service tax Applies Only in AC Restaurants: Finance Ministry

New Delhi, IANS, 10 June, 2015

Restaurants without air conditioning facility will not charge any service tax from their customers while those with ACs will charge only on the 40 per cent of the total bill amount, the finance ministry said on Tuesday.

“Restaurants, eating joints or messes which do not have the facility of air-conditioning or central air-heating in any part of the establishment are exempt from service tax,” the ministry said in a clarification.

“In other words, only air-conditioned or air-heated restaurants are required to pay service tax,” the statement said.

For such restaurants, 60 per cent of the value is to be deducted from the total amount charged while applying the rate of service tax, and tax is to be calculated on the balance 40 per cent, it added.

With the increase in the rate of service tax to 14 per cent from June 1, the tax rate is effectively 5.6 per cent of the total amount charged.

Finance Minister Arun Jaitley in his budget proposed to raise service tax from 12.36 per cent (including education cess) to 14 per cent. The tax is levied on all services, except a small negative list.

Service charge on food at restaurants illegal, says administration

14 November, 2014, Hindustan Times, Chandigarh,

The Chandigarh administration has declared service charge as illegal and has directed all the hotels/restaurants not to levy service charge on the customers failing legal action will be taken against them.

As per the rules of ministry of consumer affairs, service charge cannot be levied on food served at the table.

Throwing norms to the wind, the restaurants have been fleecing consumers by charging money ranging from 6% to 12% on the bill.

By the illegal illegally levy service charges, the restaurants are putting additional burden on consumers, who already have to pay around 25% taxes in form of value-added tax (VAT) at the rate of 12.5%, service tax and luxury tax at the rate of 4.85% and 7.42%, respectively.

According to excise department, service charge is not a government levy and is collected by the restaurants themselves.

As per excise department officials, the multifarious taxes and other charges unnecessarily inflate the foods bills and there is lot of resentment among the public particularly with regard to service charges.

The decision has been taken following issue taken up by city-based social activist Ajay Jagga with administration.

“The authorities should ensure that the directions are complied in toto and proper check in kept on all the hotels and restaurants and this order is complied with,” said Jagga.

Interestingly, following the directions from the ministry of consumer affairs, the administration had declared the practice illegal in 2006.

However, with no check in place, several restaurants continued to indulge in the malpractice under the nose of the administration and the practice showed no sign of abating.

– DeshGujarat