Service Charges charged by Hotels & Restaurants ---- illegal.
1.The government today clarified that "service charge" collected by certain restaurants and hotels is not "service tax", which is levied at a rate of 5.6% on the total bill.
2.In a statement, the Finance Ministry said some hotels, restaurants and eateries, besides charging for the food and beverages, are also levying "service charges" in their bills which are retained by them.
3.In case of air-conditioned eateries and hotels, the service tax at the rate of 14% is charged only on 40% of the bill amount.
4.The government had increased the service tax rate to 14% from 12.36% (including education cess) from June 1.
Service charges collected by hotels @5.6% is illegal since it is collected in disguise of Service Tax of Govt. levied tax.
Hotels already charging very high rates of foods cashing their goodwills.
We should not pay and Govt. should take action against such hotels. more