Wednesday, January 18, 2017

Poor service at Le Chef Restaurants in Sector 37 Faridabad viz-a-viz charging of service charges by Restaurants and Hotels

Poor dining service at Le Chef Restaurants in Sector 37 Faridabad viz-a-viz charging of service charges by Restaurants and Hotels

Department of Consumer Affairs has brought out a press release advising Restaurants and Hotels not to charge service charge compulsorily into the food bill and waive off the same if the diners do not wish to pay. The ground realities seems to be different specially in view of various media reports. I have also stated in my various posts in this blog that the Restaurants have been adapting to unethical business practices in charging service charge compulsorily and also wrong charging of VAT on 100% value of the food bill.

I have visited a restaurant in Sector 37 Faridabad named Le Chef. The restaurant were earlier charging service charge by clubbing with the VAT thus misleading the diners. A bill is given below:
As can be seen above that Le Chef charged VAT at the rate of 28.13% in their bill No. 1010 dtd. 29/05/2015. Over and above an amount of Rs. 100/- was also paid as 'Tip' as the immediate glance of the bill indicated that the restaurant has not charged any service charge. However, when glancing again later on, the asterik below indicated that VAT charged was including 15% as service charge. Hence the Restaurant owner has charged for the tip two times, one by misleading the diners and 2nd time at the time of taking tip separately. Ideally the charging of service charge by adding in the VAT should have been treated as crime and the books of account should have been seized by the Trade Tax Authorities.

The matter was referred to Trade Tax, Haryana. The Trade Tax Department was requested to confirm as to whether the Le Chef has paid whole amount of the VAT charged in the bill to the tax authority as charged under the head 'VAT'.  However, nothing happened leading to believe that  Trade Tax Department must be hand in glove for such evasion. 

Again visited Le Chef Restaurant with 8 more guests on 13/01/2017 to celebrate famous "Lohiri" festival. Surprisingly the service of the Restaurant was so poor that it was very difficult to entertain the guest. The soup served was cold. Even the dishes were taken off from the table after quite a long time. When the main course was to be served, the waiter did not serve the bowls. On demanding the bowls, the waiter supplied plastic bowl. On asking, the waiter informed that the "की बर्तन सब झूठे पड़े हैं. ". We had no other option but just to remain silent in the best interest of the guest entertainment. We were surprised to receive the bill for an amount of Rs. 2,682/- which was including an amount of Rs. 206 towards service charge. 
The quality of the service was too cheap that we decided not to pay the tip of Rs. 206 charged as service charge. In the light of the press release of Department of Consumer Affairs, we asked cashier to waive off the service charge as we do not wish to pay. The cashier refused to do so and asked that this amount has to be paid irrespective of whether the service was good or bad. A feedback to the restaurant was handed over followed by a complaint by email. The Restaurant owner in the first instance itself should have contacted the diner after getting the feedback, had the Restaurant owner a quality conscious and there should not have been no occasion to complain subsequently. Having no response received from the Restaurant, the complaint was taken up by email on 16th January 2017.

A copy of the complaint to Le Chef is reproduced below. However, there is no response laeding to believe that the Restaurant is following unethical business practice and the service need to be rated as poorest. 

Email Complaint to Le Chef:
"We in the group of none (9) person including 6 guests had visited your restaurant on 13/01/2017. We all including guest had a very poor experience while dining. The daal and sabzi was served at the cold temperature. Not only the cool, it was served in disposable bowls saying " बर्तन झूठे पड़े हैं इसलिए यही कटोरियां हैं. "
We all were shocked to see the waiter response. We did not speak at that time to create any awkward situation. We were further surprised when the waiter and the cashier even refused to reverse service charge of Rs. 206.70 being 10% of food value+VAT+ service tax etc. The same were charged in compulsion against the principle of Consumer Protection Act 1986. Department of Consumer Affairs had already directed that the service charges need to be optional and waived off if the consumer wishes so. This was referred to cashier who stated that it is compulsorily and do not care for the directions issued by Govt. of India.
A copy of the bill number GF/170113/8 is attached for ready reference for your further appropriate action else the matter shall be referred to appropriate authorities including publishing appropriately on the public domain."

Friday, January 6, 2017

Weather Department of Consumer Affairs is serious enough to address the unethical business practices of charging service charges and VAT by Restaurants and Hotels Industry?

Weather Department of Consumer Affairs is serious enough to address the unethical business practices  of charging service charges and VAT by Restaurants and Hotels Industry? 

I have written an article titled "Are Restaurants and Hotels adapting to unfair business practices?" on this blog on 21st April 2015, the link of which is

The said article stated importance of making service charges being charged by Restaurants in the form of tip need to be made optional and let it be left to the option of the diners whether to pay it or not to pay. Department of Consumer Affairs, Govt. of India has recently issued a press release No.  156064 which appeared in newspapers on 2nd January 2017. A copy of the press release is copied here for ready reference.
Department of Consumer Affairs have advised Restaurants and Hotel Industry to make service charge as optional and to waive off these charges if the consumer feel dissatisfied with the service. The advise to the Industry seems to have been softened despite a fact that the services charges are being charged from the consumers in an unethical manner. The facts have been substantiated in the article on 21st April 2015 which can be pursued further.  As stated therein:
1. When the Ministry of Finance has already notified for the purpose of service tax that the 40% value of the food bill is towards services and hence enacted that the service tax shall be applicable on 40% of the value of the bill, any additional amount charged in the bill under head service charge amounts to double charging. The food bill already has 60% value as cost of material and 40% value as service towards serving to the diners. 
2. As the advise states to waive off the service charges if requested by the consumer, it means that the charges could be added up in the bill. The moment the diner request to waive off the charges, it become discretion of the Restaurant whether to waive off or not more so because the Department of Consumer Affairs press release is of advisory in nature may be followed or not.
3. The compulsorily levy of service charges is not in a good taste as it become chargeable irrespective of whether the services offered have been good or not.
4. Despite the fact that the Restaurants were charging service charge in the bills, the waiters keep expecting the 'Tip'. More soever, the service charges are being mislead taken as "Govt. taxes" and the consumers also pay additional tip. It become double charging the so called tip.
5. The people go to hotels and restaurants for entertainment and relaxation, and not for arguing against levying of service-charge in case of dis-satisfactory service. As such most of the people do not care for clarifications/notifications issued by government-departments, thus paying ‘service-charge’ unnoticed by them being at their discretion. If the hotels/restaurants wish to pay something extra to their staff, they may do it at their own rather than forcing customers for 'compulsory’ contributions. It is also known fact that even after levy of ‘service-charge’ in bills, serving-staff stand before customers in anticipation of ‘tips’
 6. Some of the media reports have also checked in the few Restaurants in New Delhi. The Restaurants have clearly refused to waive off the service charges. It means that if any consumer is dis-satisfied with the services, he/she cannot opt 'not to pay' as the same is likely to result into tussle between Restaurants employees and the consumers. Indirectly despite the advise of Govt. of India as to make service charge as optional, these charges shall continue to be forced upon the consumers with a little option of not to pay. 

Department of Consumer Affairs may reconsider the issue and make it mandatory not to charge the service charge in the bill else face cancellation of their licences. While it is expected Govt. of India gets sensitized to the issue, it will also look into the way VAT is being charged on 100% of the value of the bill as well as charging of VAT and Service Tax on beverages which are sold on MRP. Hon'ble High Court of Uttarakhand has already adjudicated that the VAT is chargeable on 60% of the value of the bill as 40% of the bill is already taxed with service tax.