Hyderabad Resto-Bar Booked For Charging 10% Service Charge; Serving Less Liquor

The issue of service charge has been controversial since last few years – Govt has been repeatedly saying that restaurants, hotels, and commercial establishments cannot forcefully add service charge in the bill.

However, restaurants and hotels have been charging the same, and the customers are being forced to pay via one excuse or the other.

Now, probably for the first time, a resto-bar in Hyderabad has been booked for charging ‘service charge’ in the bill, and for serving less liquor, than claimed.

Hopefully, this will set a new precedent in the service industry, all over the world.

Hyderabad Resto-Bar Booked For Service Charge

Few days back, Legal metrology officials entered Dirty Martini Resto Cafe Bar in Jubilee Hills, Hyderabad and acted like regular customers, and unleashed a decoy operation.

First, they ordered four pegs of whiskey, and when it was delivered, they found that each of these pegs had 25% less content: They ordered 60 ml, but received only 45 ml.

Hence, against the total amount of Rs 1800 for these 4 pegs, they cheated customer of Rs 457.

However, the icing on the cake was the service charge added in the total bill – The resto-bar added 10% as a service charge on the overall bill, which is clearly illegal.

Assistant controller RG Bhaskar Reddy said, “Collection of service charges is illegal. The bar management has collected 10% of bill amount as service charges. We booked a case for this violation under the Consumer Protection Act,”

Besides, the outlet charged Rs 257 for Redbull, when the MRP of the same is Rs 99.

An investigation is currently on for the charges.

Service Charge Is Illegal: Govt. Of India

After huge uproar on issue of service charges being forcefully added by restaurants and hotels in the bills, Indian Govt. clarified that this is illegal. At that time, service tax and VAT were the only taxes which were legal, and service charge was something which the hotel/restaurant owners kept to themselves.

In 2015, Padma Sri, Additional Commissioner in-charge of service tax with the Central Board of Excise Customs (CBEC) had said: “As far as the legal imposition from the government is considered, it is only service tax and not service charge which customers are supposed to pay on their total food bill.

As per The Consumer Protection Act, 1986 too, service charge is illegal, Govt. re-confirmed this in 2016 and 2017.

After the implementation of GST, the same theory applies: Besides GST of 5%, there can’t be any other taxes or charges applicable.

Service charge is like a tip, which the customer can or cannot pay, as per their own convenience.

Have you been charged a service charge? Do let us know by commenting right here!

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