A week after Bollywood actor Rahul Bose highlighted how JW Marriott Hotel in Chandigarh billed him a staggering Rs 442 including GST for just two bananas, the Federation of Hotel & Restaurant Associations of India (FHRAI) on Tuesday said the hotel did nothing "illegal".
In a statement, FHRAI Vice-President Gurbaxish Singh Kohli said that the 18 per cent GST levied by the hotel on Bose's bill was "a legal requirement incumbent upon the hotel".
Kohli said that chain hotels have a presence across many cities and follow Standard Operating Procedures. They are not engaged in sale-purchase of fruits and vegetables but provide service of accommodation and restaurant service including food and beverages to the 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 Rs 10 at a roadside stall could be served at Rs 250 in a luxury hotel," Kohli explained.
Justifying the 18 per cent GST, Kohli said that food served within the hotel premises with a declared tariff for accommodation of Rs 7,500 per day and above attracts GST at the rate of CGST 9 per cent and UT-GST 9 per cent.
FHRAI Secretary Pradeep Shetty added that bananas or unpacked fruits are outside the purview of GST in retail stores, but when served in a restaurant or hotel as a fruit platter or a whole fruit, 18 per cent GST is applicable.
"The hotel has correctly charged the GST on the bill, which was legally payable by the customer. This is what the laws demand of us, we don't have a say in the matter," Shetty said.
On July 22, Bose had posted the bananas bill charged by the JW Marriot Hotel, Chandigarh, kicking off a huge controversy.
Later, the Chandigarh Excise & Taxation Department served a show-cause notice to the hotel and slapped a Rs 25,000 penalty for levying GST on the two bananas, violating the provisions of HSN/Chapter 803.
In view of the fracas over the two bananas, the FHRAI treasurer D.V.S. Somaraju said an advisory has gone out to all its members to sensitize their staff on how to handle such situations, and said it would issue precautionary measures to avoid such incidents in the future.