Tuesday 14 July 2020

Charging extra tax on discount items illegal: Consumer forum

- Posted on 28 September 2017

Chandigarh, Sep 28 (IANS) The District Consumer Disputes Redressal Forum in Chandigarh has once again ruled that shops cannot charge extra value added tax (VAT) on items sold on discounted price, saying that by doing so they are “indulging in unfair trade practice”.

Penalising Benetton India Private Ltd, the forum, presided by Rajan Dewan, observed: “The act of Benetton in charging VAT on discounted product clearly proves deficiency in service, having indulged into unfair trade practice on their part, which certainly had caused immense mental and physical harassment.”
The four-page order, signed on September 25, clearly mentioned that a similar question arose earlier for the determination of VAT before this commission twice — first in 2015 and later in the corresponding year.
VAT was charged on consumer goods before the Goods and Services Tax came into being on July 1.
“On September 1, 2015, it has been held that no one can charge more than the MRP (maximum retail price) and the MRP includes all taxes, including VAT and other taxes. When the MRP is inclusive of all taxes, then VAT and other taxes cannot be charged separately,” the order said.
Citing the second case of charging extra VAT, the commission in the latest order observed that while dismissing the appeal filed by Benetton on February 18, 2016, held that “if it is clearly mentioned as MRP inclusive of all taxes, charging five per cent VAT or tax is certainly against the trade practice”.
“The ratio of the aforecited judicial pronouncements are squarely applicable to the present lis (suit),” said the commission.
It directed Benetton to refund the excess amount charged as 12.5 per cent VAT, Rs 219, to the complainant and pay a compensation of Rs 1,000 for mental agony and physical harassment.
Benetton had pleaded the product was not sold on the MRP but in a discounted scheme.

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