Chandigarh

DF-II

CC/587/2016

Sh. Raghav Goel - Complainant(s)

Versus

M/s ADI Sports (Elante New) - Opp.Party(s)

In Person

02 Dec 2016

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II,

U.T. CHANDIGARH

Consumer Complaint  No	:	587 of 2016
Date  of  Institution	:	12.08.2016
Date   of   Decision	:	02.12.2016

 

 

 

Sh.Raghav Goel S/o Sh.Rajeev Goel r/o # 3296, Sector 15-D, Chandigarh

                   …..Complainant

Versus

 

M/s ADI Sports (Elante New), Elante Mall Industrial Area, Phase-I, Chandigarh -160002.

….. Opposite Party

 

BEFORE:    SH.RAJAN DEWAN                           PRESIDENT

                   SMT.PRITI MALHOTRA                    MEMBER

 

ARGUED BY:       

Sh.Atul Goyal, Adv. for the complainant

                   OP exparte.

 

PER RAJAN DEWAN, PRESIDENT

1.           In brief, the case of the complainant is that the OP, in order to promote the sale of its products, offered discount @ 40% on the M.R.P. and purchased an article of MRP of Rs.1299/- for Rs.818.37/- vide Retail Invoice dated 19.07.2016, Annexure C-1.  However, he was shocked to see the Invoice dated 19.07.2016 that a sum of Rs.38.97P was charged towards VAT @ 5% on the discounted price.  It has been averred that the cost of the article was already inclusive of all taxes. He objected to the charging of 5% VAT at the cost of the article but to no effect.  It has been averred that the OP has no legal right to charge the VAT on the MRP which is always inclusive of all the taxes.  Alleging that the aforesaid acts amount to deficiency in service and unfair trade practice on the part of the OP, the complainant has filed the instant complaint.

2.           Despite due service through registered post, none appeared on behalf of the OP and as such it was ordered to be proceeded against exparte vide order dated 07.11.2016.
3.           The complainant led evidence in support of his contentions.
4.           We have heard the ld.Counsel for the complainant and have also perused the record.
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.           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.
7.           In the present complaint, though Opposite Party had offered 40% discount on the article in question, still it 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.
8.           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 vide Annexure C-1 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 Opposite Party.
9.           Here we are fortified by the similar view taken by the Hon’ble State Consumer Disputes Redressal Commission, Bangalore, in Appeal No. 3723 of 2011, titled as “The Branch Manager, M/s Shirt Palace Branch, Black Bird Showroom Vs. Chandru H.C.”, decided on 16.01.2014.
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.
11.           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. 
12.           The ratio of the afore-cited judicial pronouncements are squarely applicable to the present lis. Therefore, the act of the Opposite Party in charging VAT on discounted product, clearly proves deficiency in service having indulged into unfair trade practice on its part, which certainly had caused immense mental and physical harassment to the Complainant.
13.           For the reasons recorded above, the present complaint is allowed and the Opposite Party is directed as under:-

a]       To refund the excess amount charged as 12.5% VAT i.e. Rs.38.97(say Rs.39/-)  to the complainant.

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

c]       To pay Rs.500/- as litigation expenses.

14.           This order shall be complied with by the Opposite party 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.
15.           The certified copy of this order be sent to the parties free of charge, after which the file be consigned.

Announced

02.12.2016

Sd/-

 (RAJAN DEWAN)

PRESIDENT

 

Sd/-

(PRITI MALHOTRA)

MEMBER