Therefore, under the law, the GST has gradually eliminated the service tax and customers are not supposed to pay it. However, the service charge still applies. The service tax is a statutory tax (imposed by the government) under the GST. It applies to the service provider, but is ultimately generated by customers who use a specific service.
According to a recent amendment, the service tax will only be charged if the restaurant is air conditioned. Previously, a restaurant was required to also have a bar, but the condition has been removed. According to the guidelines, the tip or tip paid by the customer for hospitality that they received exceeds the basic minimum service. The minister noted that the imposition of service charges is clearly arbitrary and constitutes an unfair and restrictive business practice under the Consumer Protection Act.
The government defines a service charge as a tip or a direct transaction between the customer and the waiters. It is very problematic to see the firm path taken by the food industry of continuously charging the highest price to the customer despite the massive reduction in taxes. Investopedia defines a service charge as the charge paid directly to the company for the service provided to the consumer or used for administrative or processing costs. In some restaurants, depending on their policy, the service charge is mandatory and, therefore, their staff often ends up explaining to customers every time a bill mentions a service charge higher than GST.
However, there have been many cases where restaurants have forced customers to pay service charges despite the latter's disapproval. According to the restorer, the service costs charged are often kept as a corpus fund, which is used for the existence and livelihood of the company. In the new GST rule, restaurants also sell the MRP product, such as cold beverages, so they also charge the sitting fee that is not mentioned anywhere on the bill, for example, if you drink a 200 ml cold drink, which is MRP it costs 15 rupees, they will charge you 18 rupees for which you will get the GST, right? cool, please let me know. The goods and services tax (GST) is here and, along with several other questions, it has once again raised the question of whether the service charge should be paid and why it continues to be charged.
A restaurant bill includes the cost of food (usually mentioned on the menu), the service charge and a 5% GST on food services, including takeout service. Any person who provides a taxable service to any person shall pay the service tax at the rate specified in Sec. The government department also monitors food rates in restaurants and has required restaurants to lower the rates of food supplied in order to reduce taxes paid and show benefits to customers simultaneously. The association explained that a service charge, like any other charge charged by an establishment, is part of the invitation offered by the restaurant to potential customers.
According to the Ministry of Consumer Affairs, Food and Public Distribution, the service charge charged by restaurants is the voluntary amount paid by customers, at their discretion. But since the Consumer Protection Act does not mention anything about the service charge, its interpretation is made by the court.
