Cesses, VAT behind high bills, not service charge, say restaurateurs

The hospitality indus try on Friday hit out at Union minister Ram Vilas Paswan's announcement that service charge was optional, warning that such statements could kill the booming industry . The statement comes close on the heels of a court ban on serving liquor near highways. Just last week, the minister spoke about a plan
to regulate portion sizes though he later clarified that the steps would have to be voluntary.

“The government talk ed of ease of doing business but the question restaurant industry asking is, where is the guarantee of business,“ fumes Riyaaz Amlani, president of National Restaurant Association of India ( NRAI).

NRAI is planning to hold nationwide protest against these guidelines.“The government did not talk of high taxes such as VAT, Swachh Bharat cess, Krishi Kalyan cess and service tax but talked only of service charge. Rather than clarifying that heavy taxes are resulting in inflated bills, the government is showing that restaurateurs are robbing people in the name of service charge when it is used for benefit of staff,“ he elaborates.

After the minister's initial announcement, restaurateurs TOI spoke with said there were already several instances of customers refusing to pay service charge stating their dissatisfaction with quality of services. While some simply waived off those charges, others held their ground and offered a discount equivalent to service charge rather than waiving it off.

Some customers pointed out that voluntary or not, they would pay up. Anita Arya, a business executive who eats out every weekend, says,“Who will go to a restaurant and create a ruckus over a service charge only to completely ruin the evening with a fight? Most people will end up paying.'' Restaurateur Priyank Sukhija says he is well within his rights to ask for service charge as his menus clearly mention that charge. The service charge is an incentive for a waiter, a cleaner and a chef to offer a pleasurable dining experience, he adds.

Dilip Datwani, president of the Hotel and Restaurant Association of Western India ( HRAWI), said it was sad to see constant demands being made from the hospitality industry on one issue or the other. “Service charge is a global practice and one that has been in force in India for more than half a century . The charge is neither hidden nor disguised.We cannot understand why we are being singled out,“ says Datwani.

Ketan Gohel, co-founder, Brewbot Eatery & Pub brewery , pointed out that the service charge was necessary as India doesn't have a good tipping culture: “Service charge is a major chunk of gratuity which is paid to the staff at the end of the month along with their salaries. If the government plans to remove it, then the money the staff makes in this industry would reduce drastically. It will now become tough to hire competent labour for this industry .“