‘Chandigarh restaurants can’t levy service charge’

March 10, 2016 12:00 am | Updated 07:15 am IST - Chandigarh:

Hotels and restaurants in Chandigarh have been barred from levying service charge on food bills by the city administration, saying the levy was not “backed by any statute”.

“There will be no service charge on food bills that hotels and restaurants are levying on consumers as it is not backed by any statute,” Ajit Balaji Joshi, Deputy Commissioner, UT Chandigarh said here on Wednesday.

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,” Mr Joshi said.

The city administration also warned of taking strict action if hotels or restaurants levy service charge.

“Strict action will be taken if any customer is forced to pay any extra charge on the pretext of service charge,” he said.

Last year, Union Finance Ministry had clarified that “service charge” collected by certain restaurants and hotels is not “service tax”.

The administration had even inspected city-based restaurants and hotels to enquire about collection of such charges from consumers.

City-based consumer activists had complained that certain restaurants and hotels were collecting service charges in the range of 5-10 per cent of the total bill amount and keeping it with themselves.

Top News Today

Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in


Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.