Popular for its infrastructure and urban design, Chandigarh has recently passed a ruled that no restaurants and hotels will levy the service charge on bills. Reported by a daily newswire PTI, Ajit Balaji Joshi, Deputy Commissioner, UT Chandigarh, said “There will be no service charge on food bills that hotels and restaurants are levying on consumers as it is not backed by any formal written enactment of a legislative authority of the city”.
He also added, "At present, several restaurants and hotels in Chandigarh are charging service charge on the total food bill at their will and there is no law in the country, which allowed levying of service charge. By levying service charge, the restaurants are putting additional burden on consumers, who already have to pay taxes in the form of value added tax (VAT) and service tax. Strict action will be taken if any customer is forced to pay any extra charge on the pretext of service charge.
All the restaurants and hotels in the city have been informed and strictly warned that strict action would be taken, if anybody is found taking service charge from the customers on food bills. The city administration has been active and inspecting restaurants and hotels in Chandigarh on imposing service charge to customers.
There have been claims and reports that restaurants and hotels had been charging as much as 5-10 percent of service charge on the total bill amount.