Chandigarh

DF-II

CC/232/2016

Monika - Complainant(s)

Versus

Shree Ram Apparels - Opp.Party(s)

Nitin Thatai Adv.

27 Jun 2016

ORDER

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

 

Consumer Complaint  No	:	232 of 2016
Date  of  Institution	:	01.04.2016
Date   of   Decision	:	27.06.2016

 

 

 

 

 

 

Monika daughter of Late Sh.Ashok Kumar Chhabra r/o House No.1061, Sector 12-A, Panchkula Haryana.

                …..Complainant

Versus

 

1.       Shree Ram Apparels, Shop No.27, Ground Floor, DLF City, Center Mall, IT Park, Chandigarh through its Proprietor /Manager/Authorized Signatory.

2.       TCNS Clothing Company Pvt. Ltd., # 127, Khullar Farm, New Mangla Puri, Mehrauli, New Delhi-110030 through its Manager/Authorized Signatory.

….. Opposite Parties

 

BEFORE:   SH.RAJAN DEWAN                                   PRESIDENT

                   SH.JASWINDER SINGH SIDHU                MEMBER

                  

 

For complainant                   : Sh.Nitin Thatai, Advocate.

For Opposite Party(s)          : OPs exparte.

 

PER RAJAN DEWAN, PRESIDENT

 

                   In brief, the case of the complainant is that during the sale on 26.03.2016, OP No.1 offered 40% discount on apparels at its shop and as such she purchased a round neck top solid 2 (Item No.15FE31695-20584 & Bar Code No.8903017666530) with MRP of Rs.899/- inclusive of all taxes at the discount of 40%. However, she was shocked to see the invoice dated 26.03.2016 (Annexure C-1) that a sum of Rs.26.95 was charged towards VAT @ 5%.  It has been averred that she was wrongly charged VAT twice on price after discount because price after discount is already inclusive of VAT as the price tag mentioned that it was inclusive of all taxes.  Therefore, she requested OP No.1 to refund the amount of Rs.26.95 deducted on account of VAT but it refused to do so.  Alleging deficiency in service for the above act & conduct of the Opposite Parties and also for the unfair trade practice resorted to by the OPs, this complaint has been filed by the complainant.   

2.           Despite due service through registered post, the Opposite Parties failed to put in appearance and as a result thereof they were ordered to be proceeded against exparte vide order dated 09.05.2016.
3.           Complainant led evidence in support of her 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 No.1 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), as is evident vide Annexure C-1. 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 Ann.A-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 Parties.
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 Opposite Parties 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.           It is also apt to mention here that the Opposite Parties chose not to appear before this Forum.  Therefore, in the absence of any rebuttal from the side of the Opposite Parties, the version of the complainant, supported by her duly sworn affidavit, must prevail. 
14.           For the reasons recorded above, the present complaint of the Complainant deserves to succeed against the Opposite Parties not only for resorting to unfair trade practice but also for the deficiency in service towards the complainant and the same is accordingly allowed. The Opposite Parties are directed as under:-

a]       To refund the excess amount charged as 5% VAT i.e. Rs.26.95/-, from the complainant

b]       To pay an amount of Rs.2,500/- to the complainant towards compensation for causing him mental & physical harassment on account of deficiency in service and having indulged into unfair trade practice;

c]       To pay litigation expenses to the tune of Rs.2500/-.

                   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 @12% per annum on amount as mentioned at sub-para (a) & (b) above from the date of this order it is paid, apart from paying litigation expenses.

15.           The certified copy of this order be sent to the parties free of charge, after which the file be consigned.

Announced

27.06.2016

Sd/-

 (RAJAN DEWAN)

PRESIDENT

 

Sd/-

 (JASWINDER SINGH SIDHU)

MEMBER