Restaurant and hotel owners are currently undergoing the challenge of non-implication of service tax in the country.

The unappetizing row of tipping in restaurants has been arising in the country for over a few years now, whilst the customers complain about the unawareness of the extra charge being levied.

The Central Consumer Protection Authority (CCPA) of India issued new guidelines stating that hotels and restaurants are now barred from applying the service tax either automatically or by default (the CCPA was setup in 2020 under section 10(1), of the Consumer Protection Act 2019, to prevent unfair practices and false advertising in the country).

The guidelines per se dictate that:

• The restaurants have to make it unambiguous that the tax which is being levied is completely voluntary and could be eliminated at the request of the customer.
•  No customer shall be forced to pay the service tax, and shall simultaneously be informed that the service tax is at the customer’s discretion.
• The tax should not be levied along with the food bills or as GST on the total amount payable.
• The tax shall not be collected under any other name. 
• There shall not be any restrictions on the provision of services based on the service charge to the customers. 

 As per the department, the customer can use their own discretion whether to give the benefit of the service tax to the restaurants, otherwise, without the customer’s consent it will amount to an “unfair trade practice” or a “violation of the consumer rights”. On the contrary, the government has encouraged the restaurants to pay fair and just wages to their employees and meet the significant amount by raising the prices of their products.

If the customers come up against the tax being levied, they can request the management of the eatery to take it off or stay concerned to remove it from the total bill amount. 

Furthermore, according to the guidelines the customers can compensate for their loss by lodging a complaint online with the consumer commission or through the national consumer helpline.