Service Charge Rigmarole

By Mahesh Vijapurkar

Even if the bill is hefty, a patron who has relished good food and nice service is inclined to tip the waiter. The appreciation is for the service which is why the tip goes – or should go – to the person who serves you. Though, the waiter is an employee of the eatery.

The hotel industry however sees it differently. The tip is your option, but you must pay the service charge on the bill, which is not the same as the Service Tax which the Centre has been periodically hiking for virtually everything.

From various arguments cited in the media, it appears the service charge just does not go to the waiter but is shared among everyone who makes good service possible: the chef, the cleaner, etc. There is a suspicion that the owner pockets some of it.

In the past in most places, the waiter could be paid low and told that if he satisfied the customer with proper service, the tip could be his, or most of it, thus the burden of staff costs being shifted from the owner. Now we have to assume that service charge does much the same thing.

This charge is mentioned in the bill, and before the Centre said it was not mandatory to pay, many restaurant visitors assumed it was something like a Service Tax and paid it. And over and above it, they tipped the waiter. We do not know if even that is pooled for sharing with all employees and the owners.

Now Ram Vilas Paswan, the Union Consumer Affairs Minister has pointed out it was not mandatory, the consumer could decide if he wanted to pay that or not, and the restaurants could leave the space on the bill blank so he, and not the restaurant decided how to put a monetary value on the service.

Also, the restaurants could display the service charge levied so the customer could decide if the custom should be extended to it not. It is a suggestion which works fine with the restaurateurs who have said in public domain that such customers could go where it was not levied.

The first official view on that levy had emanated from the government way back in January only now has it been officially announced as a requirement. The guidelines have been issued, as tweeted by Paswan, that the discretion was with the customer alone.

Any violation of the guidelines now requires a complaint to the local consumer court. Till, as the Consumer Affairs ministry has said, a new law enabling the ministry to set up an Authority to deal with complaints. That’s odd, and one sees the cart before the horse.

However, be prepared for one possibility. The restaurants which charge the customer for service as if bringing the food from the kitchen to your table was not their work, may opt for a comprehensive bill which includes but hides the service charge.

I have been forced to pay such bills in the past which included the Service Tax as well and when I checked with a chartered accountant, he said such a bill was not improper as long as the food costs and the Service Charge on it were indicated clearly to the authorities.