Upset over service charge, diner drags Mumbai eatery to cops

When he headed out for lunch on July 18 with his sister Amruta Mulund lawyer Abhishek Nakashe didnrsquot imagine he would end up at a local police station The siblings were at Secret Spice a vegetarian global cuisine restaurant on LBS Marg Mulund enjoying a meal of Mushroom Hara Dhania Masala Tandoori Roti and Cheese Mushroom CapsAbhishek Nakashe outside Secret Spice restaurant on LBS Marg in Mulund where an 8 service charge on his bill PicRajesh GuptaAt the end of it they were presented a bill of Rs 525 which included Rs 39 as service charge Nakashe inquired about the component with a steward refusing to pay it since the eateryrsquos menu didnrsquot carry a mention of the percentage it billed customers as service chargeA heated argument later the two claim they were confined to the restaurant for half an hour by manager Rama Murthy and the staff until the police were called Nakashe filed a complaint against the restaurant with Mulund police station making this possibly the first case in the suburb if not the city to have been registered for levying service chargeThe menu at Secret Spice just mentions lsquoTaxes and Service Charges as Applicablersquo PicSharad VegdaldquoService charge is a deceptive nomenclature and rarely do restaurants clarify the per cent levied in their menus although it is mandated that they do While I usually pay up when eating out I decided to take up the issue this time because there was ambiguity in the menu and the management wasnrsquot forthcoming with an explanationrdquo said NakasheThe siblings say they had to convince the police to act Finally a noncognizable offence NC was registered The police for their part were baffled about what section to charge the restaurant with The section that was finally applied was 504 intentional insult with intent to provoke breach of peace which calls for imprisonment for up to two years a fine or bothDuty officer Ankush Waghmode who took Nakashersquos complaint said it took him some time to investigate if specific taxation laws if any could be applied Lawyers contacted by midday said that the NC can be converted into an FIR in a Magistrate Court following which the police are free to investigate the matter Nakashe could also choose to take up the matter with the Sales Tax Department or Consumer CourtMurthy explained that service charge is levied by restaurant owners as payment for services rendered including serving food and is distributed among kitchen staff ldquoNo restaurant declares service charge percentage in its menu Itrsquos a charge thatrsquos levied because generous tips from customers have dried uprdquo he saidService charge is a variable component of the invoice and falls between 5 per cent and 12 per cent it was 8 per cent in the case of Nakashersquos bill Itrsquos usually charged for inhouse dining not takeaways While tips go primarily to the stewards service charge is evenly distributed among all staff including the backend guys after taking breakage and damages into accountWhile Chandrahas K Shetty advisor to the Indian Hotel and Restaurant Association AHAR clarified that the management was liable to declare service charge percentage to customers a top city restaurateur requesting anonymity clarified that the ldquocommotionrdquo over the levy was because in April this year the government had upped another variable component of the restaurant bill the service tax by a percentage pointldquoA menu is a bill of sale and must clearly mention the rate of service tax and service charge being imposed If it doesnrsquot there is a problemrdquo he said While customers argue that since a bill incorporates all costs including a profit the service charge is an unnecessary burdenHospitality industry members like Nachiket Shetye however hope that diners understand the significance of the service charge in time of inflation The director of Cellar Door Hospitality said ldquoItrsquos an important component to supplement the need of the staff that depends largely on tips and customer generosity for sustenanceMost restaurant staffers remain loyally employed depending on the amount and fairness with which service charge is distributed among them over and above their salary But in the case that a customer has had a less than pleasant experience we are more than happy to waive it offrdquoSatish Shetty of Maritime Food the hospitality firm that runs Secret Spice has however agreed to change the menu to print the charge levied clearly ldquoRestaurants in Mumbai have been levying service charge for the last 40 years but yes we will make a correction on the menurdquo he saidDecode your restaurant billOther than service charge your dining out bill could have sundry components inflating the amount you payService tax This is a component that goes to the Central Government who imposes a levy on the services you enjoy Earlier it covered restaurants that were airconditioned and served alcohol but now applies to all eating joints In the last budget service tax was upped from 1236 per cent to 14 per cent and most restaurants charge it on 40 per cent of the total bill including service charge The resultant rate of service tax because of the cap of 40 works out to be 56 This rise say hoteliers is responsible for growing consumer resistanceService charge Its a variable component of the invoice and falls between 5 per cent and 12 per centValue Added Tax VAT VAT varies between states Maharashtra charges 125 and differs according to category of beverage and food item For instance it is 20 per cent for hard liquor 5 for wineCharity Some eateries that tie up with nonprofits add a nominal amount to the bill which they then pass on to the charity The fine print of the bill tends to mention it but most guests are unaware that they are playing Good Samaritan and may even oversee the additional charge on the bill