State Consumer Disputes Redressal Commission
Nando'S Sukhmani Enterprises vs Gurinder Singh on 14 August, 2015
Daily Order STATE CONSUMER DISPUTES REDRESSAL COMMISSION, U.T., CHANDIGARH First Appeal No. : 166 of 2015 Date of Institution : 14.07.2015 Date of Decision 14.08.2015 Nando's Sukhmani Enterprises, Shop No.306-307, 3rd Floor, Plot No.178-178-A, Industrial Area, Phase-1, Elante Mall, Chandigarh through its Managing Partner. ......Appellants/Opposite Party No.1. Versus Gurinder Singh son of Sh. Balbinder Singh r/o H.No.59, Sector 69, Mohali, Tehsil & Distt. SAS Nagar, Punjab. ....Respondent/Complainant. Head Office F-89/11, Okhla Phase-I, New Delhi, through its Managing Director. ....Respondent/Opposite Party No.2. Appeal under Section 15 of the Consumer Protection Act, 1986. BEFORE: JUSTICE SHAM SUNDER (RETD.), PRESIDENT. SH. DEV RAJ, MEMBER.
Argued by:
Sh. ADS Jattana, Advocate for the appellant.
Sh. Gurpreet Singh Saini, Advocate for respondent No.1.
Service of respondent No.2 is already dispensed with vide order dated 15.7.2015.
PER DEV RAJ, MEMBER This appeal is directed against the order dated 29.06.2015 rendered by the District Consumer Disputes Redressal Forum-I, Union Territory, Chandigarh (hereinafter to be called as the District Forum only) vide which, it allowed the complaint and directed the Opposite Parties as under:-
"13. In the light of above observations, we are of the concerted view that the Opposite Parties are found deficient in giving proper service to the complainant. Hence, the present complaint of the Complainant deserves to succeed against the Opposite Parties, and the same is allowed, qua them. The Opposite Parties are, jointly & severally, directed to:-
[a] To refund Rs.137.55P charged from the Complainant as Service Charge;
[b] To pay Rs.7,000/-on account of deficiency in service and causing mental and physical harassment to the Complainant;
[c] To pay Rs.5,000/- as cost of litigation;
14. The above said order shall be complied within 30 days of its receipt by the Opposite Parties; thereafter, they shall be liable for an interest @12% p.a. on the amount mentioned in sub-para [a] & [b] above from the date of institution of this complaint, till it is paid, apart from cost of litigation as in sub-para [c] above."
2. The facts, in brief, are that on 27.10.2014, the complainant alongwith his family members, went to Opposite Party No.1, for lunch and ordered 02 Veggie Pita, 01 Peri Peri Paneer Kabab, 04 Kidz Burger (Veg), 05 Fresh Lime Soda, 01 Fries large, worth Rs.1,965/-, vide bill No.50735 dated 27.10.2014. It was stated that when the complainant, after having the lunch, went to the counter of Opposite Party No.1, for making payment, to his utter surprise, he was asked to pay an additional amount of Rs.137.55Ps., towards service charges. It was further stated that the Opposite Parties explained that this amount directly goes to the pocket of the waiters. It was further stated that the Opposite Parties also disclosed that their Managing Director had authorized them to charge such service charges, from the customers. It was further stated that when the complainant refused to accede to the illegal demand of service charges, made by the Opposite Parties, he was insulted in front of his family members. It was further stated that, as such, left with no other alternative, the complainant had to pay the said service charges, to the Opposite Parties. It was further stated that the aforesaid act of the Opposite Parties amounted to deficiency, in rendering service, as also indulgence into unfair trade practice.
3. When the grievance of the complainant was not redressed, left with no alternative, a complaint under Section 12 of the Consumer Protection Act, 1986 (hereinafter to be called as the Act only), was filed directing the Opposite Parties, to refund Rs.137.55 Ps paid as service charges; Rs.10,000/- for spoiling his beautiful evening, Rs.50,000/- as compensation for physical, mental pain & agony; and Rs.15,000/- as legal expenses, totaling Rs.75,137.55Ps alongwith interest @18% per annum.
4. Opposite Party No.1, in its reply, while admitting the factual matrix of the case, pleaded that the 'service charge' is nominal fee collected from the customers for the betterment of establishment and employees thereof. It was stated that Opposite Party No.1 was, therefore, well within its right to charge service charges, on the services, provided to its customers. It was further stated that levy of service charges constituted fee charged for providing hospitality and services to the customers, like the complainant and formed part of the conditions of admission as the same were conspicuously displayed, on the menu, as well as at other places within the establishment. It was further stated that the nominal fee is a part of the binding contract which is entered into by the customer as soon as the service is ordered. It was further stated that no restraint was made on the complainant in leaving the premises due to non-payment of service charges. It was further stated that neither there was any deficiency, in rendering service, on the part of Opposite Party No.1, nor it indulged into unfair trade practice. The remaining averments, were denied, being wrong.
5. Opposite Party No.2 was proceeded against exparte vide order dated 13.02.2015, by the District Forum, as none appeared on its behalf despite, due service.
6. The complainant filed replication, wherein, he reiterated all the averments, contained in the complaint, and repudiated the same, contained in the written version of Opposite Party No.1.
7. The parties led evidence, in support of their case.
8. After hearing the Counsel for the complainant, Opposite Party No.1, and on going through the evidence, and record of the case, the District Forum allowed the complaint, as stated above in the opening para.
9. Feeling aggrieved, the instant appeal, has been filed by the appellant/Opposite Party No.1.
10. Since Opposite Party No.2, which is respondent No.2, in appeal, was exparte in the District Forum and has been impleaded in the appeal as a proforma respondent therefore, its service (respondent No.2) was dispensed with by this Commission for the purpose of appeal vide order dated 15.07.2015.
11. We have heard the Counsel for the appellant, respondent No.1, and have gone through the evidence, and record of the case, carefully.
12. The Counsel for the appellant/Opposite Party No.1 submitted that the impugned order is based on surmises and conjectures and not on evidence on record. He further submitted that out of total amount of Rs.2,452/- against Bill No.50735 dated 27.10.2014 raised by the appellant/Opposite Party No.1, only an amount of Rs.137.55Ps charged on account of service charges was objected to by respondent No.1/complainant and there was no allegation of deficiency in quality of food. He further submitted that service charges are charged by the enterprise for providing basic services, which are not part of the value of the food ordered and served to a customer. He further submitted that transaction, in question, took place on 27.10.2014, whereas the District Forum erroneously allowed the complaint relying upon Chandigarh Administration's Memo dated 31.10.2014 by which Restaurants/Hotels in Chandigarh were instructed not to charge any service charges, whereas the memo dated 31.10.2014 stood superseded as was evident from the Excise and Taxation Commissioner, U.T.'s, Chandigarh Memo No.E&T (Ref.) 443 dated 24.02.2015. He further submitted that the appellant and other enterprises had filed C.W.P. No.23369 of 2014 (O&M) and in view of supersession of order dated 31.10.2014, the Writ Petition was rendered infructuous. The Counsel relied upon the judgments of Delhi High Court in The Federation of Hotels and Restaurants Association of India and Ors. Etc. Vs. Union of India and Ors., AIR 2007 (Delhi) 137 and that of Hon'ble Supreme Court of India in M/s K. Damodarasamy Naidu and Bros. etc. Vs. State of T.N. and another etc., AIR 1999 (SC) 3909. He further submitted that the order of the District Forum, being illegal, deserves to be set aside.
13. The Counsel for respondent No.1/complainant submitted that the District Forum rightly allowed the complaint. He further submitted that the appellant could not charge service charges, and, therefore, the order of the District Forum, being based on correct appreciation of evidence, be upheld.
14. It is evident that when respondent No.1/complainant alongwith his family had lunch at the appellant's Restaurant on 27.10.2014, Bill No.50735 dated 27.10.2014 in the sum of Rs.2,452/- including Rs.137.55Ps on account of service charges @7% was raised. The grouse of respondent No.1/complainant was that the appellant/Opposite Party No.1, could not charge the same.
15. The District Forum, in its order, observed in Paras 10 and 11 that, in addition to supply of food, the Restaurant provides furniture, furnishing, linen, crockery, cutlery etc. to the customer, and in order to compensate for these services, the Government had authorized the Restaurant to charge the service tax @4.94% on 40% of the bill amount under Section 2C of Service Tax (Determination of Value) Rules, 2006. The District Forum further observed that if the Opposite Parties were charging any other illegal tax, the same amounted to unfair trade practice. It further held that the Opposite Parties were fleecing customers by charging amount @7%, on the bill, as service charges and by doing so, the Restaurants were putting additional burden on consumers, who have to pay around 25% tax in the form of Value Added Tax (VAT) @12.5% and Service Tax @4.94%.The District Forum further held that the Chandigarh Administration recently declared service charges as illegal vide instructions dated 31.10.2014 and directed all the restaurants and hotels at Chandigarh not to levy service charge on the customers, meaning thereby, that the service charge could not be levied on food served on the table.
16. Apparently, the District Forum firstly did err in construing the service charges as Tax, and, secondly, it erred that Chandigarh Administration vide instructions dated 31.10.2014 declared service charge as illegal. It may be stated here, that the transaction, in question, in which, the appellant charged service charges, took place on 27.10.2014, when Chandigarh Administration's instructions dated 31.10.2014, had not come into existence. Even Chandigarh Administration's instructions dated 31.10.2014 stood superseded vide Excise and Taxation Commissioner's, U.T., Chandigarh Memo No.E&T (Ref.) 443 dated 24.02.2015, relevant paras of which, are extracted hereunder:-
"This is to inform you that the charges which are levied by the restaurants/eateries as payment for services rendered for serving the food etc. by mentioning it as service charges, S.C or S Charges, is not a Government levy but is collected by the restaurants themselves. Different restaurants levy different service charges ranging between 5% to 10% over and above the bill for food etc. In Union Territory Chandigarh some of the restaurants have been levying service charges from the consumers/ customers over and above the bill for food etc. As per the definition of the sale price envisaged in Section 2(zg) of the Punjab Value Added Tax Act 2005, as extended to and applicable to U.T., Chandigarh any sum charged for anything done by the person in respect of the goods at the time of or before the delivery thereof constitutes a part of sale price.
xxxxxx In view of the aforesaid, all concerned dealers doing the business of restaurants/eateries are directed to show cause as to why the service charges levied and collected by them from the consumers over and above the bill for food etc. be not included in the gross turnover and taxed and penalized accordingly as per the provisions of the Act ibid and the Rules made thereunder."
17. Further in The Federation of Hotels and Restaurants Association of India and Ors. Etc. Vs. Union of India and ors.'s case (supra), the Delhi High Court held that charging prices for mineral water/soft drink in excess of MRP printed on packages during the service of customers in hotels and restaurants do not violate any provision of the SWM Act as the persons enter hotels and restaurants to enjoy ambience available therein. It was further held that this does not constitute sale or transfer of these commodities. The Delhi High Court further held that Consumer Protection Act does not apply to eatables and drinks ordered and supplied in a Hotel or restaurant on the principle that such are not sale but only service and falls under the rate of caveat emptor and, hence, such persons enjoying eatables an drinks in a hotel or restaurant is not a consumer as defined in the Consumer Protection Act. Perusal of record shows that the appellant/ Opposite Party No.1 and other enterprises had also filed C.W.P.No.23369 of 2014 (O&M), but in view of supersession of order dated 31.10.2014, the same (writ petition) was rendered infructuous vide order dated 27.02.2015. The order dated 27.02.2015 (Annexure OP-1/3) passed in the writ petition is extracted hereunder:-
"The petitioners prayer briefly put is for quashing of order dated 31.10.2014.
Counsel for the respondents states that memo No.E&T (ETO-Est.)-2014/4315-4316 dated 31.10.2014 has been superseded by order dated 24.2.2015, passed by the Excise and Taxation Commissioner, UT, Chandigarh.
Counsel for the petitioners states that in view of supersession of order dated 31.10.2014, the present petition may be disposed of with liberty to the petitioners to seek their remedy, in accordance with law.
We have heard Counsel for the parties. The impugned order dated 31.10.2014 having been withdrawn and a fresh order dated 24.2.2015 having been passed, the present petition has been rendered infructuous and is disposed of accordingly with liberty to the petitioners to seek their remedy in accordance with law.
It is, however, clarified that the respondents may, if statutorily permitted, examine the question of levying of service charges by restaurants over and above, service tax."
18. In view of the above-extracted contents of Memo dated 24.02.2015 and the law settled by the Delhi High Court, the restaurants/eateries can levy service charges from the consumers. Therefore, the District Forum fell in to a grave error in allowing the complaint of respondent No.1/complainant and wrongly directed the appellant/Opposite Party No.1, to refund the amount of Rs.137.55P charged from him, as service charges. When the appellant/Opposite Party No.1 was entitled to levy service charges, there was no question of awarding compensation, on account of alleged deficiency of service and cost of litigation in the sum of Rs.7,000/- and Rs.5,000/- respectively.
19. No other point, was urged, by the Counsel for the parties.
20. In view of the above discussion, it is held that the District Forum, erred in allowing the complaint and the order passed by it, suffers from illegality, warranting the interference of this Commission.
21. For the reasons recorded above, the appeal filed by the appellant/Opposite Party No.1, is accepted, with no order as to cost. The order of the District Forum is set aside.
22. Certified copies of this order, be sent to the parties, free of charge.
23. The file be consigned to Record Room, after completion.
Pronounced.
August 14, 2015.
Sd/-
[JUSTICE SHAM SUNDER (RETD.)] PRESIDENT Sd/-
(DEV RAJ) MEMBER Ad