The charge is not backed by any statute according to local admin.
The woes of the Chandigarh restaurant and hotel industry continues with the local administration continues, with the latter now officially outlawing the levy of service charges.
Ajit Balaji Joshi, deputy commissioner, Chandigarh, issued a letter earlier this week against the levy stating that it was ‘backed by any statute’.
At present, several restaurants and hotels in Chandigarh are charging service charge on the total food bill at their will and there is no law in the country, which allowed levying of service charge, he said. “By levying service charge, the restaurants are putting additional burden on consumers, who already have to pay taxes in the form of value-added tax (VAT) and service tax,” he added.
The city administration also warned of taking strict action if hotels or restaurants levy service charge or any extra charge on the pretext of service charge.
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Last year, the Union finance ministry had clarified that service charge collected by certain restaurants and hotels is not service tax. Chandigarh’s administration had even inspected local restaurants and hotels to enquire about collection of such charges from consumers.
Meanwhile , the UT’s consumer activists had complained that certain restaurants and hotels were collecting service charges in the range of 5-10% of the total bill amount and keeping it with themselves.
