Unhappy with Hospitality? Service Tax Not Mandatory at Restaurants


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The Centre restated on Jan 02 that clients displeased with service could opt not to pay the service charge imposed by a hotel or eating place, but the National Restaurant Association of India (NRAI) cited judicial precedent to back up its case for levying service tax. It also forwarded a report entailing that guests were allowed not to visit an eating house if they did not want to make the payment of the service tax imposed by it.

The administration had elucidated previously in Parliament that the agencies could take an action against those imposing a service tax without the information and permission of customers on accusations of involving in “unfair trade practices”.

Unhappy with hospitality? Don’t pay service tax while eating in restaurant

NRAI, which signifies sovereign restaurants and chains, stated that imposing service tax was a “mutual and acknowledged practice”, which got “recognized as such” by several administrative sections.

A declaration forwarded on Jan 01 by the Union consumer affairs department stated that it had demanded states to make sure hotels as well as restaurants exhibited data that service charge was non-compulsory on their properties.

The department stated that this was being done as it had received several criticisms from clients who stated that they were being pressured to pay service tax, instead of tips, of anything between 5per cent and 20 per cent “regardless of the type of service offered”.

Opposing the imposition of service tax, NRAI president RiyaazAmlanisaid that eating house apparently follow the very similar Consumer Protection Act, which is being utilized to defend the move to punish those who charge it without the consensus of customers.

“The act stops us from indulging in any unfair method or deceptive practice. We clearly mention the service charge we levy on our menus. We are not indulging in any unfair trade practice,” he said, adding that they were employee incentives distributed evenly among the workforce,” Mr. Riyaaz added up.

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