Priya Gour
Published on: 1st September, 2022 at 19:07 IST
The Central Consumer Protection Authority (CCPA) has recently defended its guidelines that prohibit the payment of service tax on consumers. The Commission has submitted before the Delhi High Court that such a mandatory levy comprises “unfair trade practices’ and “restrictive trade practices” under the Consumer Protection Act.
The consumer does not avail themselves of any distinct good or separate service from the restaurant or hotel by paying extra for it in the bill. The commission’s recent guidelines have directed that such a levy should be called a service charge and no other name.
Earlier, the National Restaurant Association of India filed a plea which challenged the above guidelines. The CCPA was to respond to the matter concerned, which it called unlawful. Also, the employee’s wages can not be relied upon in the tax.
The CCPA July 4, 2022 guidelines were stayed, after which the Centre and CCPA moved an application for vacation stay . While staying within the guidelines, the court had ordered the restaurant to separately display such a separate levy on the menu.
According to the CCPA, “Mandatorily imposing a service charge would defeat the provisions of the Consumer Protection Act, 2019 as money is collected from consumers without allowing them the choice or discretion to decide if they want to pay it.”
The affidavit informed of a public poll where more than 88% of the voters rejected the separate levy.
“When a consumer is availing the service of a hotel or restaurant, she/he is availing the service of the hotel or restaurant as a whole and is not taking any separate service from the staff/employees of the restaurant/hotel individually.”
As a result, consumers cannot be charged separately for sales tax simply by placing food orders without prior communication. Even if they may not be willing to pay a service charge.
“When a consumer is not satisfied with the service provided to her/him, it cannot be assumed that she/he is ready and willing to pay service charge. The amount of service charge is recovered from the money that is taken from consumers who visit the hotel or restaurant. “
Such an uninformed levy, in the absence of any choice, is an outright violation of consumer rights.