Chandigarh

DF-II

CC/520/2017

Vishwadeep Kaur - Complainant(s)

Versus

Reebok India Company - Opp.Party(s)

Amandeep Singh Nirmaan Adv.

12 Oct 2017

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II,

U.T. CHANDIGARH

Consumer Complaint  No	:	520/2017
Date  of  Institution	:	20.07.2017
Date   of   Decision	:	12.10.2017

 

 

 

 

 

Vishwadeep Kaur d/o S.Narinder Singh r/o H.No.2489, Phase-II, Urban Estate Patiala.

                   …..Complainant

Versus

 

1.       Reebok India Company, Office No.6, 2^nd Floor, Sector-B, Pocket No.7, Plot No.11, Vasant Kunj, New Delhi-110070 through its Managing Director.

 

2.       Reebok Basic Clothing Pvt. Ltd., Shop No.1-1, First Floor, Elante Mall, Chandigarh-160002 through its Authorized Signatory.

….. Opposite Parties

 

BEFORE:   SHRI RAJAN DEWAN, PRESIDENT

SMT.PRITI MALHOTRA, MEMBER

SH.RAVINDER SINGH, MEMBER

 

Present:     Sh.Amandeep Singh Nirmaan, Adv. for complainant

                   Sh.Manoj Lakhotia, Adv. for the OPs.

 

PER RAJAN DEWAN, PRESIDENT

                    In brief, the facts of the case as alleged by the complainant are that he purchased a T-Shirt of the MRP of Rs.1199/- at the discount of 40% for Rs.755/- out of which a sum of Rs.35.97P has been charged as VAT @ 5% on the discounted price vide invoice date 09.01.2017. It has been averred that the MRP is always inclusive of all the taxes including VAT and he raised the objection regarding the same but to no effect. The complainant also got served a legal notice through registered post upon the OPs but the same has also failed to yield any result.  Alleging the aforesaid act & conduct of the OPs as deficiency in service and unfair trade practice, the complainant has filed the present complaint.

2.           In its written statement, OP No.2 has pleaded 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 the VAT at the applicable rates was charged on the purchase made by the complainant.  Pleading that there is no deficiency in service on its part, a prayer for dismissal of the complaint has been made.
3.           In its separate written statement, OP No.1 took almost identical pleas as were taken by OP No.2.  It has further been pleaded that the products of the answering OP are retailed through its franchise agents.   It has further been pleaded that the VAT of Rs.35.97P has been levied as per the law on the sale price. Pleading that there is no deficiency in service on its part, a prayer for dismissal of the complaint has been made.
4.           The complainant filed separate rejoinder to the written replies of the Opposite Parties controverting their stand and reiterating his own.
5.           We have heard the Counsel for the parties and have also gone through the evidence on record.
6.           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.
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, the OPs had charged 5% 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.
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 the price tag that MRP of the item in question is ‘inclusive of all taxes’, so the charging of VAT @5% separately on the discounted price is clearly unfair trade practice resorted to by the Opposite Party.
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 is squarely applicable to the present lis. Therefore, the act of the OPs in charging VAT on discounted articles 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.
12.           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 5% VAT i.e. Rs.36/- 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.

13.           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.
14.           Certified copy of this order be communicated to the parties, free of charge. After compliance file be consigned to record room.

Announced

12.10.2017                                                                             

(RAJAN DEWAN)

PRESIDENT

 

 (PRITI MALHOTRA)

MEMBER

 

 (RAVINDER SINGH)

MEMBER