Are Restaurant and Hotels adapting to unfair business practices?

I would request for the feedback from the members. The message on unethical charges by Restaurants have already been sent to CM, Delhi Govt.


I have brought an article titled
जब रेस्टोरेन्ट वाला सर्विस चार्ज बिल में लगाता है तो फिर आप टिप क्यों दें । in my blog on 13th December 2012. The link to the article is http://skvirmani-jagograhak.blogspot.in/2012/12/blog-post.html

I am now bringing out my analysis keeping in view the recent judgment of Uttarakhand High Court ruling that VAT is chargeable on 60% of the food bill as 40% of the food bill is already taxed with Service Tax.

The Restaurant and Hotel industry in India is quite complex in nature. While it is quite complex in nature, the diners and guest to the restaurants and hotels are also facing various issues like charging of VAT, Service Tax, Service charges etc.


As per media reports, National Restaurant Association of India in its report titled "India Food Service Report-2013" has estimated the current size of the Indian food industry to be at Rs 247,680 crore per annum and projected growth rate of 11 percent to touch a staggering Rs 408,040 crore by 2018.

With such a size of the industry, he industry is also a complex suffering with mushrooming of restaurants as unorganized sector. The industry varies from like in-door catering, out-door catering, fast food chains, small restaurants, AC and Non-AC restaurants and restaurants in the markets, restaurants on the highways, dhabas and are practically present in every nook and corner of the country. Many restaurants cater only to the take away item prominently including free home delivery concept within certain distances with no dining space. There are number of issues involved like generating manual bills, generating bill in the form of a slip or through computer, applicability of certain taxes based on certain parameters like AC or non-Ac Restaurants etc. It also suffers with issues like sales tax evasion, inadequate enforcement, inadequate complaint handling system, duplicates/fake bills, under-billing, over-charging, cash transactions and poor prosecution, practically absence of awareness among consumers and absence of transparent system of tax evasions petitions etc.

1. The dining in the restaurant is mostly through the menu card. While most of the restaurant have menu card but there is a absence of menu card in restaurants in remote corners too. The menu contains the list of the items along with their prices with or without stating anything about VAT, Service Tax or Service Charge. These prices are at which the consumers are being billed as cost of food items and beverages.
The diners will not find any information about the quantity of the items as such it become difficult for them to order the items like Vegetables, Dal, Deserts or any other prepared dish. There is a vide variation in the prices from one restaurant to another depending upon combination of several factors. One of the factors among other is the quantity which cannot be judged based on the prices and is most difficult task due to prevalent of associated factors like air-conditioning, aesthetic, elegance, furniture, space utilization, size of the restaurant etc. In a restaurant, the item may be sufficient to serve for four persons and in other restaurant having the same price may be sufficient for two. Why the menu card should not have details like “Qty sufficient for normal serving”.

3. The prices as indicated in the menu are the cost of the food items and beverages at which the diners make fair idea about the estimated bill that he/she is going to pay for at the end of dining. Based on these assumptions, the diners place orders depending upon affordability etc. However, on receiving the bill after dining it is noticed that the bill amount is more than the assumption at the time of placing orders. The extra amount could be in the range of 15% to 30 or even 40%. The extra amount being charged in the restaurants as a practice consist on account of following:

To continue reading please click here
http://skvirmani-jagograhak.blogspot.in/2015/04/are-restaurant-and-hotels-adapting-to.html more  

I never pay tip where service charges are applied in bill and politely tell the waiter that no cash tip as your restaurant already billed it to me.
I would like to share the very fair practice applied by restaurant "Barbeque Nation", when tried to give tip to the waiter, he said that we don't take extra tip as it is already on your bill..hope other restaurant would follow similar practice too. more  
Very god account of unfair trade practices given by Mr. SK Virmani. The matter does not end here. The members may like to give solution to various problems listed by Mr. SK Virmani. more  
Very interesting and informative - thanks Mr Virmani. The take away is that where there is a service "charge" then no tip should be paid. In short the service charge is not a tax that is to be paid to the govt. This is very relevant for consumer awareness. As regards the quantum of vat levied, this is an area of concern for customers, if only for lack of knowledge. Then again eateries may also not be aware of the content of the levy, or the rate, whether indoors or outdoors. There is obvious lack of clarity. The permutations of the circumstances of the eating places being what these are, there is need to simplify - both for the vendors who are liable to charge the vat levy and for the customer who is required to pay for what he/she orders and consumes. Yes it is true that there is substantial difference in the total bill inclusive of vat etc and the rates specified on the menu card. more  
Thanks such awareness but our CM is just for How Off more  
Thank you Mr.Virmani for such an exhaustive information,this is going to be long way helpful.SUGGESTED this information be circulated to others and all local circles also. more  
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