Chandigarh

DF-II

CC/814/2017

Ram - Complainant(s)

Versus

Gini and Jony Chawla Fashion - Opp.Party(s)

Harpreet Saini Adv.

27 Dec 2017

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II,

U.T. CHANDIGARH

Consumer Complaint  No	:	CC/814 of 2017
Date  of  Institution	:	17.10.2017
Date   of   Decision	:	27/12/2017

 

 

 

 

Ram s/o Sh.Hari Pal r/o VPO Jalauli, Tehsil Barwala, District Panchkula, Haryana.

                        …..Complainant

Versus

Gini and Jony Chawla Fashion Elante Mall (2953) Shop No.223, Second Floor, Plot No.178-178-A,  Elante Mall Phase-I, Industrial & Business Park, Chandigarh through its Manager or Authorized Representative.

….. Opposite Party

 

BEFORE:      SH.RAJAN DEWAN                                   PRESIDENT

                        SMT.PRITI MALHOTRA                            MEMBER

                   SH.RAVINDER SINGH                              MEMBER

 

ARGUED BY:

  Sh.H.S.Saini, Adv. for the complainant

                          Sh.Arun, Manager of the OP.

 

PER RAJAN DEWAN, PRESIDENT

                        In brief, the case of the complainant is that the OP, in order to promote the sale of its products, offered discount @ 20% on the M.R.P. and he purchased a product of the MRP of Rs.1599/- for Rs.1354/-. According to the complainant, the OP had charged a sum of Rs.64.46P as VAT @ 5% on the discounted price despite the fact that the MRP is inclusive of all the taxes.  He also objected to the charging of 5% VAT at the MRP of the article but to no effect.  Alleging deficiency in service for the above act & conduct of the OP and also for the unfair trade practice resorted to by the OP, this complaint has been filed by the complainant.  

2.             The OP in its written statement while admitting the factual aspects of the case, has pleaded that discount was subject to charging of VAT extra, to be paid by the purchaser, and the advertisement qua the same was also displayed at the store.  It has been pleaded that the discounted price is exclusive of VAT and the VAT charged over and above the discounted sale price paid to the government.  Reliance has also been placed upon the definition of sale price as defined under Section 2(zg) of the Punjab VAT 2005 as applicable to UT, Chandigarh. Pleading that there is no deficiency in service or unfair trade practice on their part, Opposite Parties have prayed for dismissal of the complaint.
3.             We have heard the arguments advanced by both the sides and have gone through the documents on record.
4.             The parties led evidence in support of the contentions.
5.             The core question which survives for determination is whether VAT can be charged on the discounted price when MRP of a product is inclusive of all taxes? The answer to this question is in the negative.
6.             The OP in its defence pleaded that the VAT was charged as per the rules, regulations and provisions of Punjab Value Added Tax 2005. A bare perusal of the provisions of the Act referred, nowhere permits the imposition of tax on the goods which have already been tagged as ‘inclusive of all taxes’. In our opinion the MRP of any product tagged as ‘inclusive of all taxes’ establish that no more tax is required to be levied. Importantly, the OP has also not referred to any particular provision which is applicable herein, in order to justify their stand. At any rate, the OP has miserably failed to produce on record any cogent, convincing and reliable piece of evidence in the shape of any rules/ instructions authorizing them to levy/ charge the amount of VAT in question on the MRP, which is mentioned as “inclusive of all taxes” from the gullible consumers.    
7.             In our opinion, there is a difference between the remarks “Retail Price” and “Actual Price” of the goods. The MRP is inclusive of all taxes and a retailer can sell at a price below the MRP (Maximum Retail Price) because MRP is the maximum retail price allowed for that commodity and not the actual price. A retailer can well reduce his margin built into MRP, while on the other hand, the actual price can be much lower than the MRP. When once it is displayed that the MRP is inclusive of all taxes, then in no circumstances the VAT can be added to it afterwards.
8.             In the present complaint, though OP had offered 20% discount on the article in question, still they charged 5% extra VAT on discounted price in spite of the specific mentioning of the maximum retail price (inclusive of all taxes). Since it is an offence to sell at a price higher than the marked price, so it is also not legal to charge any tax on the product/item carrying tag of maximum retail price inclusive of all taxes.
9.             After giving our thoughtful consideration, we are of the considered opinion that no one can charge any tax on the product where MRP is mentioned as inclusive of all taxes including VAT/other taxes etc. When MRP of the goods is inclusive of all taxes then VAT/other taxes cannot be charged separately; which establish that MRP includes VAT also and after discount no VAT can be charged, so on discounted product also VAT cannot be charged.  But as in the present complaint, it is quite clear from Annexure C-2 that MRP of the product/item in question is ‘inclusive of all taxes’, so the charging of VAT @5% separately is clearly unfair trade practice resorted to by the OP.
10.             A similar question arose for determination before our Hon’ble State Consumer Disputes Redressal Commission, U.T. Chandigarh in First Appeal No. 210 of 2015, decided on 01.09.2015 in case titled as “Shoppers Stop and others Versus Jashan Preet Singh Gill and Others”, wherein it has been held that no one can charge more than the MRP and MRP includes all taxes including VAT/other taxes. When MRP is inclusive of all taxes, then VAT/Other taxes cannot be charged separately.  In the recent decision in Appeal No.61 of 2016, decided on 18.02.2016, in case titled as “Benetton India Private Limited Vs. Ravinderjit Singh”, the Hon’ble State Consumer Disputes Redressal Commission, U.T., Chandigarh, while dismissing the appeal filed by the Appellant (Benetton India Pvt. Limited) has held that if it is clearly mentioned as MRP inclusive of all taxes, charging of 5% VAT or tax, is certainly against the trade practice. 
11.             The ratio of the afore-cited judicial pronouncements are squarely applicable to the present lis. Therefore, the act of the OP in charging VAT on discounted product, clearly proves deficiency in service having indulged into unfair trade practice on their part, which certainly had caused immense mental and physical harassment to the complainant.
12.             For the reasons recorded above, the present complaint is allowed and the OP is  directed as under:-

a]         To refund the excess amount charged as 5% VAT i.e. Rs.64.46P (Say Rs.64/-) to the complainant.

b]         To pay an amount of Rs.500/- to the complainant towards compensation for mental & physical harassment.

c]         To pay Rs.1,100/- as litigation expenses.

13.             This order shall be complied with by the OP within a period of 30 days from the date of receipt of its copy, failing which it shall be liable to pay interest @9% per annum on amount as mentioned at sub-para (a) & (b) above from the date of this order till it is paid,  besides litigation expenses.
14.             The certified copy of this order be sent to the parties free of charge, after which the file be consigned.

Announced

27/12/2017

Sd/-

(RAJAN DEWAN)

PRESIDENT

Sd/-

(PRITI MALHOTRA)

MEMBER

Sd/-

 (RAVINDER SINGH)

MEMBER