Where to report VAT cheating?

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skoka123

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Hi,
I have been to a restaurant (Deli 9 Bistro, Gachibowli, Hyderabad) yesterday where they are cheating customers. I have ordered bottled drinking water along with food. They charged me Rs 50 for the bottled water which was MRP. I was OK with that but they also charged Service Tax and VAT on it. When I brought it to the attention of the restaurant manager that they cannot charge VAT on packaged products that have MRP as the VAT is already included in the MRP, they reluctantly removed the charges for the bottled water altogehter.

I then got a revised bill without charges for the water. I paid the bill as I was getting late. After reaching home I realized that they again billed me wrong. They charged me VAT for Food, Service Charge (Tips) and Service Tax. The VAT should be only on the Food. When I brought it up their attention they said they will give a call back from their accounts team. I am yet to receive the call.

Imagine paying VAT on Tips!!!

Deli_9_Bistro_1.jpg


If you see the attached bill, they are charging me 14.5% VAT on Rs 1,300.09 (1115 + 111.50 + 73.59) which is Rs 188.51. Instead they should be charging 14.5% on Rs. 1115 which would have been Rs. 161.68. In effect they overcharged me Rs. 27. Imagine this hapenning to hundreds of unsuspecting customers day in and day out through the years.

What are my options to take them to task?

Thanks,
Srikanth.
 
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Can someone post the correct values with all these cess etc, say on a bill of 100, so we can take it as an approx?
 
vivek.krishnan said:
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Can someone post the correct values with all these cess etc, say on a bill of 100, so we can take it as an approx?
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Here you go.
upload_2016-11-7_9-40-40.png


The Service Tax and VAT varies from State to State. Certain states charge 14% as the Service tax. So you might 5.6% as the service tax which is 14% of 40% of the food bill. Anyway, all these things will go away once GST comes into place.
 
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Lodged a complaint on the site. Let us see what the response will be.

BTW, I really like to know who the damn developer was for this site. The damn things does not accepts "Enter key" in the description of the complaint but does not tell what the problem is other than prompting to enter valid message.
 
What if they appropriated this anomalous amount into various items and showed nothing as tax on the bill (or your desired value as the tax)?
Would you be happy and visit the place again without complaining to higher authorities?
 
ssslayer said:
What if they appropriated this anomalous amount into various items and showed nothing as tax on the bill (or your desired value as the tax)?
Would you be happy and visit the place again without complaining to higher authorities?
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Absolutely. Why not? I know what they are charging before hand. After all was I not ready to order water for Rs 50 when it is sold for Rs 20 elsewhere. That is, the true value of the goods is only Rs 20 but as long as the prices are displayed clearly it is my choice to dine there or not.

If you mean they would not charge me any tax at all instead include it as part of inflated food prices, I probably would not go to such an establishment for two reasons.
1. The Restaurant would cease to be in business the very next day as the Commercial Tax Office will descend on it like a ton of bricks.
2. If they are willing to cheat the government then how confident can I be that they are not cheating on the food ingredients (example: reheat and serve last nights leftovers etc).
 
a) As if you compute the possible bill total with taxes and duties included before ordering a dish.
What I said was pretty clear.
When you saw Chicken Pizza for 275, did you compute the potential tax on it to know how much you will actually end up paying?

Say the establishment includes the same tax IN the menu list price (showing the Chicken Pizza available for Rs 300 say, would you have raised such a hue and cry?

b) Why will commercial tax office have any issue if the merchant pays whatever taxes are applicable? There are a lot of places where the listed prices include all taxes and duties applicable. Do you mean to say those establishments do not pay any tax?






And referring to your first post: Are you sure service charges = tips?
 
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ssslayer said:
a) As if you compute the possible bill total with taxes and duties included before ordering a dish.
What I said was pretty clear.
When you saw Chicken Pizza for 275, did you compute the potential tax on it to know how much you will actually end up paying?

Say the establishment includes the same tax IN the menu list price (showing the Chicken Pizza available for Rs 300 say, would you have raised such a hue and cry?

b) Why will commercial tax office have any issue if the merchant pays whatever taxes are applicable? There are a lot of places where the listed prices include all taxes and duties applicable. Do you mean to say those establishments do not pay any tax?

And referring to your first post: Are you sure service charges = tips?
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Service Charge = Tips - Absolutely no doubt about that. This goes to the restaurant (how the restaurant divides it among their staff is up to them). ST (Central) and VAT (State) go to the Government. You probably need to do a lot of catching up on how Input Tax Credits and VAT works. How GST is now going to impact States that are strong in Manufacturing and why states like Tamil Nadu do not want VAT to be replaced with GST is something you will appreciate when you understand this. Anyway, I am not here to preach. You guys are probably more intellectual than me.

You are missing the whole point of ethics here. I do not care what the price is as long as I know what they are charging is legal and that I can afford it. When I order a dish I know what the total is likely to be. How? Simple: It is going to be or at least it has to be Service Tax (10% in case of this restaurant and it is clearly mentioned on every page of the menu) + 6% ST+ 14.5% VAT. So for every Rs 100 I will be paying 30.5% as various levies and Taxes. As a general rule of thumb it is around 1/3 of your food bill. In case of liquor the VAT is 20%.

You also raise a very good point. "Do you compute the possible bill total?" In my case I do because I know how to do that. There are lot of small restaurants where they include ST and VAT in the price shown in the menu. They do in fact mention as much in the menu. It is likely that most of these restaurants do not show any TIN number and nobody cares either.

What I have reported to CTO is not new. In fact even international brands such as Hyatt have been doing it and caught pants down in 2013.

Similarly, Hotel Hyatt at Gachibowli collected an excess VAT of Rs 31.56 lakh and that of Hotel Kamal Pvt Ltd alias Hotel Basera, Secunderabad, was Rs 1.21 crore during the previous financial year. The excess VAT collection of the other hotels and restaurants during 2012-13 that were inspected by the vigilance department were as follows: Taj Tristar, Secunderabad (Rs 10 lakh), Hotel Regenta One, Nanakramguda (Rs 12.4 lakh), and that of Atluri Foods or Chutneys, Banjara Hills, (Rs 1.76 lakh).

The link to the above article: http://timesofindia.indiatimes.com/...n-service-charge-tax/articleshow/25349848.cms
 
skoka123 said:
You also raise a very good point. "Do you compute the possible bill total?" In my case I do because I know how to do that.
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All right, end of argument here.
:)
Similarly, Hotel Hyatt at Gachibowli collected an excess VAT of Rs 31.56 lakh and that of Hotel Kamal Pvt Ltd alias Hotel Basera, Secunderabad, was Rs 1.21 crore during the previous financial year. The excess VAT collection of the other hotels and restaurants during 2012-13 that were inspected by the vigilance department were as follows: Taj Tristar, Secunderabad (Rs 10 lakh), Hotel Regenta One, Nanakramguda (Rs 12.4 lakh), and that of Atluri Foods or Chutneys, Banjara Hills, (Rs 1.76 lakh).
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I am not disagreeing that establishments may be charging extra money from consumers as tax. So instead of Rs 100, they charge Rs 120 from you.
But if they deposit this Rs.120 with the Govt coffers, under what law will anyone prosecute the establishment?
Even in the news item, I couldn't see any mention of punishment or fine on the erring businesses.
 
ssslayer said:
All right, end of argument here.
:)

I am not disagreeing that establishments may be charging extra money from consumers as tax. So instead of Rs 100, they charge Rs 120 from you.
But if they deposit this Rs.120 with the Govt coffers, under what law will anyone prosecute the establishment?
Even in the news item, I couldn't see any mention of punishment or fine on the erring businesses.
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Two points here. 1) We do not know if they are paying the additional VAT collected to the government or not. 2) So what if they are paying to the government they are still robbing me.

I am already paying Income Tax, Security Transaction Tax, Short and Long Capital gains tax, Wealth Tax, Stamp Duty, Customs Duty, Service Tax, VAT, Krishi Kalyan Cess, Swach Bharat Cess etc. Mind you all these are double taxation in the sense all taxes except the income tax is paid on top of the already tax deducted income. I cannot argue with the government because all these are legally enacted tax laws. Now nobody has authority to charge me excess tax that is not enacted by either the state or the central government.

Just think of it this way. Say I rob you and deposit the money in PM relief fund, is that OK?

Coming to your question of prosecution, I guess Commercial Tax Office has the jurisdiction to prosecute them for IMPROPER taxation. If not them, consumer courts can do it.

I will file an RTI after a month to see what progress has been made w.r.t my complaint. If nothing then consumer court is an option.
 
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That answers the question, letmein.
upload_2016-11-9_18-37-30.png


So by definition the Constitution of India bars the restaurants from imposing, levying and collecting excess VAT. This should conclude our discussions on this topic.
 
I like it when there is a healthy discussion though we may not all agree with each other. Agree to disagree and move on.

Jago grahak jago is only a slogan but real consumer activism is still elusive in India. I wonder if there is a Class Action Lawsuit in India similar to one in US.
 
benryu said:
No VAT should only be on 60% of the bill and Service tax on 40% of the bill value.
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Depending on state, VAT is chargeable on 100% cost of food items and non-alcoholic beverages (made in the restaurant and not packaged). For alcoholic beverages, its usually at a much lower rate.
Service tax is on 40% cost. VAT definitely cannot be charged on amount including the service tax and service charges.
 
ssslayer said:
a) As if you compute the possible bill total with taxes and duties included before ordering a dish.
What I said was pretty clear.
When you saw Chicken Pizza for 275, did you compute the potential tax on it to know how much you will actually end up paying?

Say the establishment includes the same tax IN the menu list price (showing the Chicken Pizza available for Rs 300 say, would you have raised such a hue and cry?

b) Why will commercial tax office have any issue if the merchant pays whatever taxes are applicable? There are a lot of places where the listed prices include all taxes and duties applicable. Do you mean to say those establishments do not pay any tax?
Click to expand...

Even if they list the prices inclusive of taxes, the receipt would still have to show the break up of the taxes and the tax registration numbers. For example if they charge Rs 300 inclusive of taxes for a dish, they would have to reverse calculate the taxes and show the breakup. If you get a receipt without breakup, legally, its worthless as a proof of purchase. It might as well have been a mock receipt that you created yourself.
 
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