Hotel Banana Row: FHRAI Defends JW Marriot's Bill, Says It's Not Illegal
By: Pinki Wed, 31 July 2019 1:52 PM
In a recent incident where Bollywood star Rahul Bose was charged Rs 442 for two bananas at JW Marriott hotel in Chandigarh, the Federation of Hotels and Restaurants of India (FHRAI) on Tuesday clarified that the hotel has not done anything illegal.
The apex hotel body also recapitulated that charging 18 per cent Goods and Service Tax (GST) is a legal requirement for the hotel.
Gurbaxish Singh Kohli, Vice President of FHRAI said, "Chain hotels have a presence across several cities and follow Standard Operating Procedures (SOPs). We need to understand that the hotel is not engaged in the sale and purchase of fruits and vegetables but it provides service of accommodation as well as restaurant service which includes the supply of food and beverages to its guests. Unlike a retail store where bananas can be purchased at market price, a hotel offers service, quality, plate, cutlery, accompaniment, sanitized fruit, ambience and luxury and not the commodity alone. A coffee, available at ten rupees at a roadside stall could be served at Rs.250 in a luxury hotel."
Standing firm on their part, the body also clarified that the hotel did the right thing by charging 18 per cent GST on food and beverages provided in the hotel, which was legally payable by the customer. It further stated that the rate for supply of services including goods by a restaurant is 9 per cent Central Goods and Service Tax (CGST) and 9 per cent Union Territory Goods and Service Tax (UT GST).
"Food served within the premises of a hotel with a declared tariff for the accommodation of Rs.7500/- per day and above is chargeable under Services Accounting Code 9963 at the rate of 9 per cent CGST and 9 per cent UT GST. So, while bananas, or other unpacked fruits, are outside the purview of GST at a retail store, when served in a restaurant or hotel, whether as a fruit platter or a whole fruit, as per existing GST laws a levy of 18 per cent is applicable. This is what the laws demand of us, and we don't have a say in the matter," said Pradeep Shetty, Jt. Honorary Secretary, FHRAI.
However, the apex hospitality body has issued a recommendatory to its members on ways to handle such situations where a guest may have ordered eatables, including fruits from outside the menu.
The Excise and Taxation Department of the Union Territory further imposed a fine of Rs 25,000 on the hotel for over-charging Rahul Bose for fruits served to him in the hotel.
The fine was imposed after the hotel authorities fail to give a satisfactory reply on a show-cause notice served over the issue.