Chandigarh

DF-II

CC/734/2016

PP Singh - Complainant(s)

Versus

M/s United Colors of Benetton - Opp.Party(s)

In Person

03 Jan 2017

ORDER

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

Consumer Complaint  No.	:	734 of 2016
Date  of  Institution	:	07.09.2016
Date   of   Decision	:	03.01.2017

 

 

 

 

 

P.P.Singh s/o Late Sh.Satwant Singh r/o H.o.106, Sector 11-A, Chandigarh.

                   …..Complainant

Versus

 

United Color of Benetton, Adi Sports (Elante New), Chandigarh -160002 through its Manager.

….. Opposite Party

 

BEFORE:     SH.RAJAN DEWAN                       PRESIDENT

                SMT.PRITI MALHOTRA                   MEMBER

 

ARGUED BY:       

Complainant in person.

Sh.Sumeet Goel, Advocate for the OP.

 

PER RAJAN DEWAN, PRESIDENT

                   In brief, the case of the complainant is that the OP, in order to promote the sale of its products, offered discount @ 50%  on the M.R.P. He purchased three packs of two Top Mens/Summer (T-shirts) of the MRP of Rs.1999/- each for Rs.3148.41P vide Retail Invoice dated 07.08.2016, Annexure C-1.  However, he was shocked to see the Invoice dated 07.08.2016 (Annexure C-1) that a sum of Rs.149.94P was charged towards VAT @ 5% on the discounted price.  It has been averred that the cost of the articles was already inclusive of all taxes. He objected to the charging of 5% VAT at the cost of the articles but to no effect.  It has been averred that the OP has no legal right to charge the VAT on the MRP which is always inclusive of all taxes.  Alleging that the aforesaid acts amount to deficiency in service and unfair trade practice on the part of the OP, the complainant has filed the instant complaint.

2.           In its written statement, the OP took preliminary objections inter alia that the Forum does  not have the jurisdiction to adjudicate the pricing issue; that the Forum lacks jurisdiction to adjudicate an issue covered under the VAT Act; that the allegations made in the complaint cannot be adjudicated in a summary proceedings; that the complaint is not maintainable as it fails to bring on record any document to prove mis-representation on the part of the OP;  It has further been pleaded that a discounted price does not become a New MRP that ought to be inclusive of all taxes as is being alleged by the complainant. It has further been pleaded that the MRP is purely a valuable consideration received against the sale of product. It has further been pleaded that the complainant never raised any issue in relation to the charging of VAT on the discounted price, since he was well informed about the terms and conditions displayed alongwith advertisements pertaining to the discount scheme.  It was denied that the complainant was charged tax on tax.  Pleading that there is no deficiency in service or unfair trade practice on their part, Opposite Parties have prayed for dismissal of the complaint.
3.           The parties led evidence in support of their contentions.
4.           We have heard the complainant, learned Counsel for the OP and have gone through the documents on 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.           The OP has argued that they have not charged anything above MRP of the product in question and thus can impose VAT. This stand of the Opposite Party is bereft of any force as the discount so offered is part and parcel of their promotional policy showing hefty discounts in order to attract/ allure the gullible customers; who approach them under the misleading belief of getting hefty discounts declared by them which comes out to be an illusion when they are forced to pay a good amount of VAT illegally imposed.  We are of the opinion that the discount, so offered by the OP, is offered from its own margins, as per its  own choice, and are not pressurized to do so, and once the price of the product is mentioned as ‘inclusive of all taxes’, then none can add even a single penny on account of any tax. It can only be done in regard to the goods/ products where its price does not include all taxes. 
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, though the Opposite Party had offered discount on the articles 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). 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 items 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 vide Annexure C-1 that MRP of the items in question is ‘inclusive of all taxes’, so the charging of VAT @5% separately is clearly unfair trade practice resorted to by the Opposite Party.
10.           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.
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.
12.           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.
13.           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 items 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.
14.           For the reasons recorded above, the present complaint is allowed qua the OP. The Opposite Party is directed to refund the excess amount charged as 5% VAT i.e. Rs.149.94/- (say Rs.150/-) from the complainant with lump sum compensation of Rs.1,500/-, within a period of thirty days from the date of receipt of certified copy of the order, failing which it shall be liable to pay the awarded amounts to the complainant with interest @ 9% p.a. from the date of this order till actual payment.
15.           The certified copy of this order be sent to the parties free of charge, after which the file be consigned.

Announced

03.01.2017

Sd/-

(RAJAN DEWAN)

PRESIDENT

 

Sd/-

(PRITI MALHOTRA)

MEMBER