Ferozepur Consumer Commission Holds "Hotel International" Liable For Overcharging GST On Bottled Drinks

Brief Facts

On 24 November 2020, Gurtej Singh (Complainant) visited a hotel in Ferozepur City (Hotel International) with a friend for a meal. They ordered food along with a 500ml bottle of mineral water and a 500ml cold drink. The hotel charged them Rs. 424/-, which included a 5% GST amounting to Rs. 19/-. However, the printed rates for the mineral water and cold drink were Rs. 20/- and Rs. 30/-, respectively. The hotel charged Rs. 25/- for the mineral water and Rs. 40/- for the cold drink, citing additional service tax. When Gurtej asked about this extra charge, the hotel refused to explain, leading the complainant to file a consumer complaint stating this act as a deficiency in service and an unfair trade practice.

Arguments of the Hotel

In response to the consumer complaint, the Hotel argued that the complaint was false and baseless. They denied charging any illegal service tax and stated that Gurtej Singh actually purchased a 600ml cold drink, not a 500ml one. They also mentioned that the complainant did not object to the service tax during payment and emphasized that hotels and restaurants provide additional services like ambiance and cutlery, justifying their right to charge service tax as per the law. The Hotel admitted providing a printed bill totaling Rs. 424/- and defended their right to charge service tax on mineral water and cold drink. They contended that the purpose of a customer visiting a restaurant is to enjoy its ambiance, creating an indivisible contract of service along with the sale of food and drinks.

Observations of the Commission

The Commission observed that the Hotel (service provider) could not charge GST above the MRP as GST is inclusive in the MRP. The Commission also highlighted that the service provider did not provide the drinks in a glass, meaning the complainant only received the bottles. Consequently, they allowed the complaint, stating that Hotel International had overcharged GST amounting to Rs. 3.25/- and ordered them to pay this back along with interest @ 6% P.A. from the date of filing the complaint. Additionally, they directed the opposite party to compensate the complainant with Rs. 3000/- for mental agony, harassment, and litigation expenses within 45 days.

Case Title: Gurtej Singh vs. Hotel International

Counsel for the Complainant: Sh. Navdeep Soi, Advocate

Counsel for the Opposite Party: Sh. B.S.Gill, Advocate

Click Here To Read/Download The Order