I went to a restaurant and I was charged for service tax on compete bill instead of the service charge. Curious, I asked the management but they denied plainly. I thought I would use the bill to file an RTI legally to some taxation authority. Its not just matter of few rupees. Its matter of charging illegally and many customers. Please guide me. I dont want to sue the restaurant directly and make a case but to complain this to an authority and they look after the case and make sure they dont do it again. Correct me if I am wrong in my assumptions. I have heard about similar issues but cant find an authentic statement from government site about this fact that service tax is calculated on service charge not the complete bill.
From India, Gurgaon
Dinesh Divekar
Business Mentor, Consultant And Trainer
Insolvency N Gst Professional
+1 Other

I have the bill if needed and any lawyer is free to file a report with copy of the bill. Just ask me.
From India, Gurgaon

Refer this article to see whether you have been charged extra
Service Charge, Service Tax and VAT on Restaurant/Hotel Bills !
This iste does yeoman service to inform and educate people on investments etc.
You can lodge a complaint with copy of bill with the local Service tax
Department if you are certain about being overcharged.

From India, Pune
Dinesh Divekar

Dear SGstudent,

Generally in the star hotels or 3-star standalone restaurants, when the bill is raised for the consumption of food and services, it has three components viz. food charges, service charge and service tax. Depending on the government rules, few restaurants charge VAT in place of service tax.

Service charge is levied by hotels or restaurants for the maintenance of their facility. Generally it is not levied by the roadside eateries. Nevertheless, their services cannot be equated with the star hotels or their equivalent. Secondly, whether to levy service charge or not is a call of the owner of the restaurant of the hotel. Customer or consumer of the services is expected to apprise himself/herself on the total components of bill value. Raising the objections after availing of the services is legally untenable.

Why raise objections on the service charge alone? You may raise the objections on the food charges itself. However, how much to charge is purely a call of the owner of the hotel. Customer cannot raise objection on raising the exorbitant charges. The eateries at the airports also have astronomical charges. Whether to pay the charges or not is a call of the user. Nobody forces him/her to avail of the services.

Because of the word "service", it appears that you have confused between the concept of "Service Tax" and "Service Charge". Former is levied by the government and latter by the owner. Beyond the common word "service", there is no commonality between the two.

When MRP of a mineral water bottle was Rs 15/- a customer had raised objection for charging it for Rs 50+ South India Hotels & Restaurants Association (SIHRA) has clarified several times that the hotels or restaurants can charges excess amount to provide the services.


Dinesh Divekar

From India, Bangalore

thanx for writing this ... the tax system says that service charge will be on 40% of the bill ... that means if the bill is of rs 100/- that means service charge will be charged on rs 40
From India, Delhi

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