Service Charges : Hidden Implications

In general terms, it is taken that the service charges are actually some kind of compulsory tips. It is not totally wrong, but one must consider other implications as well.

I had earlier experienced, and I am sure that many of you too had experienced, that a bottle of cold drink with MRP of Rs 10, is sold at the road side shops for Rs 12. The shop keepers say that although the MRP of the bottle of the cold drink is Rs 10, they need to keep it in the friz to maintain it’s low temperature, and the cost of refrigeration needs to be recovered.

This is also true for other drinks like Beer. Whatever is the MRP of a beer bottle of a particular brand, it is NEVER available at any bar and/or restaurant at that MRP. Many times, the price charged for a cold beer bottle is two, three or even more times the original MRP of the bottle.

Because the bars and restaurants need to legally sell the bottle at it’s MRP, the difference in the price charged, and the MRP is shown as the Service Charge.

This raises a new question.

Is it legally needed to specify some of the physical conditions of the product to adhere to it’s MRP? (Like temperature in the above example). Then for that product, the concept of MRP is a failure.

Unless the said law is amended to specify the temperatures at which that product can be stored, and then appropriate MRPs to adhere to those different conditions.

Another relevant point is that, many restaurants offer two types of services.

In one type, the customer can choose from the menu card and order as per one’s own choice, so the product is specially made for the customer and is served at his/her table.

Second, the Buffet type, where there are already many dishes prepared and ready, which the customer can choose from and has to follow self service to take the items chosen in his dish to his table.

While in the first type, there is an extra work by the restaurant staff, the other has no such extra work to be done by the restaurant staff.

And yet, the service charges for both the services offered in the same restaurant, are calculated in exactly the same manner.

Therefore, instead of jumping to the conclusion, whether the service charges should be totally banned, one needs to make a detailed study to find whether another laws are applicable, and if so, what is the final solution which can be offered to the customers, while keeping them informed about the charges that shall get applicable, through the Menu Card and other displays the restaurants put up. more  

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The cost of sale should not be added to the MRP. more  
Resp sir I had recentely gone to Raigad Maha a big Fort of Shiviji Mahararaj Here the water cost per bottle was Rs 20/-- more than double the mrp. You have to pay or dehydrate & die. The tourisim minister should also look into this more  
We just returned from a week long holiday in Pokhara and Kathmandu in Nepal. In all the eateries or cafeterias that we visited, be it on the roadside or in 5-star hotels, the bills without exception included service charge of 10%. No one questioned this service charge. Question: Are we in India probably carrying it too far? more  
you forget about road side hotel,in railway station itself packet food printed mrp been scrached and selling extra, many kirana shops selling only in cash.. more  
This issue was discussed several times on this post. OK let us fight it again. 1) You can see heavy loot on Railway Stations, Particularly MP and North belt rails. They dont bother about the action to be taken or law. They bluntly ask consumers to go ahead against them legally. 2) Airports : 500 times more price they charge on soft drinks, Tea, Food. Yesterday I had tea at airport costing Rs. 113/- for a cup. Food: Rs. 750 for two items like Subji Roti. Water : Rs. 55/- Does every body think that, our great Ministers and Government doesnt know about it? They know. But who cares. You elect us, we will rule for 5-years. If again fooled, we will rule another 5-Years and so on. more  
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