Chandigarh

DF-II

CC/88/2017

Kunal Garg, Advocate - Complainant(s)

Versus

Reebok India Company - Opp.Party(s)

Gaurav Gupta Adv. & Shama Adv.

02 Aug 2017

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II,

U.T. CHANDIGARH

Consumer Complaint  No	:	88/2017
Date  of  Institution	:	24.01.2017
Date   of   Decision	:	02.08.2017

 

 

 

 

 

Kunal Garg, Advocate r/o #1001, Sector 4, Panchkula.

                   …..Complainant

Versus

 

1. Reebok India Company, through its Director/Authorized Signatory, Address: Unitech Commercial Tower-2, Block-B, 7^th Floor, Greenwood City, Sector 45, Gurgaon-122001, Haryana.

 

2. Reebok Basic Clothing Pvt. Ltd., through its Director/Authorized Signatory, Shop No.101, First Floor, Elante Mall, Industrial Area, Phase-I, Chandigarh.

….. Opposite Parties

 

BEFORE:     SHRI RAJAN DEWAN, PRESIDENT

SMT.PRITI MALHOTRA, MEMBER

SH.RAVINDER SINGH, MEMBER

 

Present:     Complainant in person.

                   Sh.Manoj Lakhotia, Adv. for OP No.1.

                   OP No.2 exparte.

 

PER RAJAN DEWAN, PRESIDENT

                In brief, the facts of the case are that the OPs, in order to promote the sale of its products, offered discount @ 40% on the M.R.P and he purchased a pair shoes of the MRP of Rs.6999/- on discount vide invoice dated 20.01.2017 for Rs.4724/- including Rs.524.92P charged as VAT @ 12.5% on the discounted price. It has been averred that the MRP is always inclusive of all the taxes including VAT. It has further been alleged that he asked the official of OP No.2 to re-check the bill in his computer if there is some mistake in calculating the discount which seems to be given less than 40% or overcharged on account of VAT, but OP No.2 not only refused to entertain the complaint but also misbehaved with him and used derogatory language. The complainant has alleged that the OPs have adopted unfair trade practice by charging extra VAT on the discounted price. 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, OP No.1 took the preliminary objections inter alia that the complainant was fully aware of the terms and conditions displayed by the OP before purchasing the product in issue and after knowing about the discount offer and after being fully aware of the terms and conditions on which the discount offer could be availed, the complainant after due application of mind accepted the terms and condition by paying the consideration amount without any protest whatsoever.  It has further been pleaded that since the issue charging VAT on the discounted price is already sub judice before the Hon’ble Supreme Court in SLP No.8868 of 2017 titled as M/s Aero Club (Woodland) Vs. Rakesh Sharma and the Hon’ble Apex Court was pleased to admit the SLP and grant leave vide order dated 31.03.2017 and, therefore, the complaint is required to be adjourned sine die. Pleading that there is no deficiency in service on its part, a prayer for dismissal of the complaint has been made.
3.              Notice sent for the service of OP No.2 was received back with the report of refusal. Since refusal was good service, and none appeared on behalf of the OP No.2 on the date fixed, therefore vide order dated 06.03.2017, it was proceeded against exparte. 
4.           The complainant filed rejoinder to the written reply of OP no.1 controverting its stand and reiterating his own.
5.           We have heard the complainant in person, learned Counsel for OP No.1 and have also gone through the evidence on record.
6.           The Counsel for OP No.1 has argued that since the SLP No.8868 of 2017 titled as M/s Aero Club (Woodland) Vs. Rakesh Sharma is subjudice before the Hon’ble Apex Court and, therefore, the proceedings in the instant case be adjourned as sine die. However, he has not been able to place on record any stay order and as such the objection of the Counsel for the OP, in this regard, cannot be accepted and the same is rejected accordingly.
7.           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.
8.           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.
9.           In the present complaint, the OPs 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.
10.           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 on the discounted price is clearly unfair trade practice resorted to by the OPs.
11.           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.
12.           As regards, the plea of the complainant regarding compensation on account of use of derogatory language as alleged in para No.6 of the complaint is concerned, the same cannot be acceded to without there being any cogent and reliable evidence to that effect.  In Surendra Kumar Tyagi Vs. Jagat Nursing Home and Hospital and Another, IV (2010) CPJ 199 (N.C.), the principle of law, laid down, by the National Commission, was to the effect that the compensation should be commensurate with loss and injury, suffered by the complainant. The compensation is required to be fair, just and not unreasonable and arbitrary. The Consumer Foras are not meant to enrich the consumers, at the cost of the service provider, by awarding unfair, unreasonable and highly excessive compensation. Keeping in view the overall facts and circumstances of the present case, the complainant is adequately compensated by awarding compensation under the head of mental agony and physical harassment that will take care of the physical harassment and mental agony suffered by him at the hands of the OPs.
13.           The ratio of the afore-cited judicial pronouncements are squarely applicable to the present lis. Therefore, the act of the OPs in charging VAT on discounted article in question, 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.
14.           For the reasons recorded above, the present complaint is allowed qua the OPs. The OPs are directed as under:-

a]     To refund the excess amount charged as 12.5% VAT i.e. Rs.525/- (rounded off) from the complainant.

b]     To pay an amount of Rs.2,500/- to the complainant as compensation for mental agony & physical harassment;

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

15.         This order shall be complied with by the OPs within a period of 30 days from the date of receipt of its copy, failing which they 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.
16.           Certified copy of this order be communicated to the parties, free of charge. After compliance file be consigned.

 

Announced

02.08.2017                                                                

Sd/-

(RAJAN DEWAN)

PRESIDENT

 

Sd/-

(PRITI MALHOTRA)

MEMBER

 

Sd/-

(RAVINDER SINGH)

MEMBER