Chandigarh

DF-II

CC/400/2015

Shyam Sunder Sharma - Complainant(s)

Versus

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

Sh. Gaurav Bhardwaj Adv.

14 Jan 2016

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II, U.T. CHANDIGARH

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Consumer Complaint  No	:	CC/400/2015
Date  of  Institution	:	29/07/2015
Date   of   Decision	:	14/01/2016

 

 

 

 

 

Shyam Sunder Sharma son of Shri L.P. Sharma, resident of House No. 302, E-Block, Shivalik Vihar, Naya Gaon, District S.A.S. Nagar, Mohali.

Complainant.

 

Vs

 

1.       M/s ADI Sports, Shop No.18, Ground Floor, DT Mall, I.T. Park, Kishangarh, Chandigarh – 160101, through its Proprietor/ Manager/ Authorized Signatory.

 

2.       M/s Reebok India Company, 7^th Floor, Unitech Commercial Tower-II, Sector 45, Block-B, Greenwoods City, Gurgaon – 122001, Haryana, through its Manager/ Authorized Signatory.

 

 Opposite Parties  

 

BEFORE:  SH. RAJAN DEWAN                       PRESIDENT

                   SH. JASWINDER SINGH SIDHU   MEMBER

                   MRS.PRITI MALHOTRA               MEMBER

 

 

For Complainant	:	Sh. Gaurav Bhardwaj, Advocate.
For OPs	:	Sh. Inderjit Singh, Advocate.

 

PER priti Malhotra, MEMBER

 

 

                   Succinctly put, the Complainant had purchased two T-Shirts from the Opposite Party No.1 under flat 70% sale offered on Reebok merchandise. It has been averred that the MRP of the said T-Shirts was Rs.2299/- and Rs.2999/- respectively which was inclusive of all taxes. It has been alleged that after giving 70% discount the Opposite Party No.1 had charged Rs.689.70/- and Rs.899.70/- from the Complainant and had also charged Rs.79.47/- as 5% VAT on Rs.1589.40/- which was already inclusive of all taxes. The Opposite Party No.1 issued retail invoice dated 18.7.2015 for an amount of Rs.1669/- (Annexure C-1) by rounding off 1589.40.  It has been alleged that at the time of payment, the complainant raised the objection relating to the charging of extra VAT @5%, as the cost of product in question is inclusive of all taxes and VAT has already been added to the said cost and the complainant cannot be charged tax on tax, but to no avail. Hence, alleging the aforesaid act & conduct of the Opposite Parties as deficiency in service and unfair trade practice, the Complainant has filed the present Complaint.

 

2.           Notice of the complaint was sent to Opposite Parties seeking their version of the case.

 

3.           Opposite Party No.1 in its reply, while admitting the factual aspects of the case, has pleaded that as per terms & conditions of the offer, the percentage of discount was applicable only on the maximum retail price (MRP) of the merchandise and VAT on the same was to be charged extra from the customer. Hence, an amount of Rs.79.47/- was charged on the discounted selling price of the merchandise sold i.e. at Rs.1589.40/-. It is submitted that the goods in question were not sold at the MRP rather on the discounted price, and the VAT was rightly levied as per the provisions of the VAT tax Act of Punjab & Haryana, 2003 per which the VAT is levied on the sale price and the sale price means the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed at the time of sale as cash or trade discount according to the practice, normally prevailing in the trade but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof.  It has been asserted that since the answering Opposite Party had clearly displayed in the Store that VAT would be charged extra over the discounted sale price, therefore, there was no unfair trade practice on its part. Denying all other allegations and stating that there is no deficiency in service on its part, Opposite Party No.1 has prayed for dismissal of the complaint. 

 

4.           Opposite Party No.2 in its reply, while admitting the factual matrix of the case, has pleaded that its products are being retailed through franchisees on principal-to-principal basis. It has been asserted that since the alleged VAT @5% had been charged on a sale made at the store operated by Opposite Party No.1, therefore Opposite Party No.2 has no role in the billing and accounting procedures of the Opposite Party No.1.  Denying all other allegations and stating that there is no deficiency in service on its part, Opposite Party No.2 has prayed for dismissal of the complaint. 

 

5.           Parties were permitted to place their respective evidence on record in support of their contentions.

 

6.           We have heard the learned Counsel for the parties and have also perused the record with utmost care and circumspection.

 

7.           The case of the Complainant is that he was charged extra VAT @5% for the two T-Shirts with MRP of Rs.2299/- and Rs.2999/- respectively after giving a flat discount of 70%. The stand taken by Opposite Party No.1 is that VAT has rightly been calculated and charged on the sale of the disputed items.
8.           In this backdrop, the core question which survives for determination is whether the MRP includes all taxes including VAT and whether after discount VAT can be charged or not?

 

9.           It has been contended by the Opposite Party No.1 that it had clearly displayed in the Store that VAT would be charged extra over the discounted sale price, therefore, no unfair trade practice can be attributable on its part. However, we are not impressed with this for the sole reason that it is not the case of the Opposite Party No.1 that the amount of VAT charged has been deposited with the respective taxation authorities. At any rate, there is nothing on record to show that the VAT charged from the customers is deposited with the respective taxation authorities. Furthermore, the Opposite Party No.1 has miserably failed to produce on record any cogent, convincing and reliable piece of evidence in the shape of any rules/instructions authorizing it to levy/charge the amount of VAT in question on the MRP, which is mentioned on the Price Tag (Annexure C-2) as “inclusive of all taxes” from the gullible consumers.

 

10.           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 about 10 to 15 percent lower than the MRP. Sometimes, the printed MRP is so high that the difference between the selling price and the MRP can be as much as 30 to 50 percent. As 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 MRP when it is specifically mentioned that “inclusive of all taxes”.       

 

11.           After giving our thoughtful consideration, we are of the considered opinion that no one can charge more than the MRP and MRP includes all taxes including VAT/other taxes. When MRP is including all taxes then VAT/other taxes cannot be charged separately. Meaning thereby that MRP includes VAT and after discount no VAT can be charged, so on discounted product also VAT cannot be charged..  

 

12.           Though Opposite Party No.1 had offered 70% discount on the articles in question, still it charged 5% extra VAT on discounted price inspite of specific mention on the tag MRP inclusive of all taxes as is evident vide Annexure C-2. When, once it is mentioned as MRP with inclusive of all taxes, charging of 5% VAT or tax, is certainly against the trade practice. 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.

 

13.           A similar question arose for determination before the 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.. The ratio of the aforecited judicial pronouncements are squarely applicable to the present lis. Therefore, the act of the Opposite Party No.1 in charging VAT on discounted product, clearly proves deficiency in service having indulged into unfair trade practice on its part, which certainly caused immense mental and physical harassment to the Complainant. 

 

14.            In these set of circumstances, we are of the concerted view that the customer/complainant is liable to pay 5% of the VAT imposed by the Opposite Party if the article is labelled as MRP “exclusive of all taxes”.  But it is quite clear vide Annexure C-2 i.e. price tags of the products in question that the MRP is inclusive of all taxes, so the charging of VAT @5% is clearly unfair trade practice resorted to by the Opposite Party. 

 

15.           For the reasons recorded above, the present complaint of the Complainant deserves to succeed against the Opposite Party No.1, and the same is accordingly allowed. The Opposite Party No.1 is directed:-

 

[a]     To refund the wrongly charged VAT of Rs.79.47P to the Complainant          

 

[b]     Pay Rs.15,000/- as compensation on account of deficiency in service and causing mental and physical harassment to the Complainant and certainly for having indulged into unfair trade practice. 

 

[c]      Pay Rs.5,000/- towards costs of litigation;

 

                   The complaint against Opposite Party No.2 fails and is accordingly dismissed with no order as to costs. 

 

16.           The above said order shall be complied within 30 days of its receipt by the Opposite Party No.1; thereafter, it shall be liable for an interest @18% per annum on the amounts mentioned in sub-paras [a] & [b] above from the date of institution of this Complaint, till it is paid, apart from costs of litigation of Rs.5,000/-. 
17.           Certified copy of this order be communicated to the parties, free of charge. After compliance file be consigned to record room.

Announced

14 January, 2016                                                             

Sd/-

(RAJAN DEWAN)

PRESIDENT

 

 

Sd/-

(JASWINDER SINGH SIDHU)                                                                                                      MEMBER

 

 

Sd/-

(PRITI MALHOTRA)                                                                                                      MEMBER