Chandigarh

DF-II

CC/241/2017

Deepak Kumar - Complainant(s)

Versus

M/s College Shoes - Opp.Party(s)

Nikunj Dhawan Adv.

10 Jul 2017

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II,

U.T. CHANDIGARH

Consumer Complaint  No	:	241 of 2017
Date  of  Institution	:	09.03.2017
Date   of   Decision	:	10.07.2017

 

 

 

 

 

Deepak Kumar s/o Sh.Ram Nath, H.No.2677, Sector 38 West DMC, Chandigarh

                   …..Complainant

Versus

 

M/s College Shoes, SCO 30, Sector 17, Chandigarh.

….. Opposite Party

 

BEFORE:     SHRI RAJAN DEWAN, PRESIDENT

SMT.PRITI MALHOTRA, MEMBER

 

 

Present:     Sh.Nikunj Dhawan, Adv. for the complainant

                   Sh.Vikas Verma, Authorized Agent of the OP.

 

PER RAJAN DEWAN, PRESIDENT

                    In brief, the facts of the case are that the complainant purchased a pair of shoes of the MRP of Rs.2500/- vide invoice dated 09.02.2017 for Rs.2813/- including Rs.312.50P (rounded off to Rs.313/-) as VAT @ 12.5%. It has been averred that despite his repeated protests, the OP had charged Rs.313/- on account of VAT @ 12.5% on the MRP of Rs.2500/-.  It has further been averred that as per the MRP Act 2006, MRP is inclusive of tax and under Punjab VAT Act, 2005, the VAT is leviable on sale consideration received or receivable. However, the MRP of the shoes was inclusive of all taxes. The complainant has alleged that the Opposite Party has adopted unfair trade practice by charging extra VAT from him. Hence, alleging the aforesaid act & conduct of the Opposite Party as deficiency in service and unfair trade practice, the complainant has filed the present complaint.

2.           In its written statement, Opposite Party took the preliminary objections inter alia that the complaint cannot be entertained as the complainant failed to understand the  concept of MRP and the discount offered which was a condition of taxes to be charged extra VAT which is always paid or is payable on the occasion of sale when the goods are sold.  It has further been pleaded that the OP clearly mentioned on the display boards that 40% to 60% discount will be available on the MRP but the VAT was to be charged extra.  Pleading that there is no deficiency in service on its part, a prayer for dismissal of the complaint has been made.
3.           We have heard the Counsel for the complainant & the authorized representative of the OP and have also gone through the evidence on record.
4.           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.
5.           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.
6.           In the present complaint, the Opposite Party had charged 12.5% extra VAT 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.
7.           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 item in question is ‘inclusive of all taxes’, so the charging of VAT @12.5% separately is clearly unfair trade practice resorted to by the Opposite Party.
8.           It has been argued on behalf of the OP that  the OP is offering 50% discount on MRP, as displayed, with a further condition that the price shall be subject to VAT extra.  However, this plea of the OP is not sustainable in the view of proposition of law laid down by the Hon'ble National Commission in the Revision Petition No.3477/2016 titled as M/s Aero Club (Woodland) Vs. Rakesh Sharma, decided on 04.01.2017. The operative part of the said judgment read as under:-

14.    In our opinion, the advertisement in the above form is nothing but an allurement to gullible Consumers to buy the advertised merchandise at a cheaper bargain price, which itself was not intended to be the real “bargaining price” and, therefore, tantamounts to unfair trade practice, as found by both the Fora below. Significantly, under Section 2(d) of the Consumer Goods (Mandatory Printing of Cost of Production and Maximum Retail Price) Act, 2014, the “Maximum Retail Price” printed on the goods, a mandatory labelling requirement, at the relevant time, for pre-packaged goods, means “such price at which the consumer goods shall be sold in retail and such price shall include all taxes levied on the goods.” In that view of the matter, having seen the word “FLAT” in the advertisement, a consumer would be tempted to buy the goods under a bonafide belief that he would get a flat 40% off on the MRP. In our opinion, therefore, the defence of the Petitioners that they had charged VAT as per law is of no avail in so far as the issue at hand, viz. misleading advertisement, resulting in unfair trade practice, is concerned. We are in complete agreement with the Fora below that any discount falling short of “Flat 40%” on the MRP would amount to unfair trade practice, as defined in the Act.

 

9.           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.
10.           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 article in question, 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.
11.           For the reasons recorded above, the present complaint is allowed qua the OP. The Opposite Party is directed as under:-

a]      To refund the excess amount charged as 12.5% VAT i.e. Rs.313/- from the complainant.

b]      To pay an amount of Rs.1,000/- to the complainant as compensation for mental agony & physical harassment;

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

12.           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, apart from paying litigation expenses.
13.           The certified copy of this order be sent to the parties free of charge, after which the file be consigned.

Announced

10.07.2017                                                                             

Sd/-

(RAJAN DEWAN)

PRESIDENT

 

Sd/-

(PRITI MALHOTRA)

MEMBER