Payment of Minimum Rates of Wages
Section 12 of the Minimum Wages Act provides as follows:
12. Payment of minimum rates of wages. - (1) Where in respect of any scheduled employment a notification under section 51 is in force, the employer shall pay to every employee engaged in a scheduled employment under him wages at a rate not less than the minimum rate of wages fixed by such notification for that class of employees in that employment without any deductions except as may be authorized within such time and subject to such conditions as may be prescribed.
So, the legal requirement is that the minimum wages notified for the employment in question are to be paid. Thus, the Labour Inspector is not wrong in insisting on it. However, it also states that authorized deductions are permissible. Therefore, you need to approach the Labour Commissioner, explaining the facts and circumstances, and seek authorization for such deductions. A better alternative could be to approach the Hotel & Restaurant Owners' Association, as this will be a common problem faced by others too. Until that time, on records compliance of the notified minimum wages is necessary.