Thereafter I have been working on a drive bringing out such unethical business practices by the retailers using other social media too. The articles were being shared with the stakeholders as a matter of practice including sharing with the concerned retailer.
As it has become a trend wherein the retailers
announce the discount on the MRP either on % age basis or on a fixed amount
basis and then the consumers are being charged VAT on these discounted prices
so arrived at the time of billing either at counters or through online
shopping. While some retailers use to charge the additional VAT at the time of
billing, some retailers also used to write “VAT
Extra” in their display board, advertisements etc. The charging of
additional VAT in both the situations is an unfair business practices on a
basic fact that the MRP is always inclusive of VAT and other charges under the
provisions of MRP rules. Therefore any discounted prices so arrived after
discounting on MRP becomes discounted MRP and hence it is inclusive of VAT/
Sales Tax on the proportionate basis.The industrial behavior in charging the taxes which are not chargeable
reflects some dubious activities as most of the business always thinks of how
to avoid taxation. The possibility of some vested interest cannot be ruled out.
The consumers continued to be deceived by the
retailers and such deception is still continuing not only by the small
retailers but also by the big brands like Shoppers Stop, Lifestyle, Big Bazar
Gen Nxt, Myntra.com, Jabong (ecommerce shopping site) etc. The only exception seems to be the Ritu Wears against which Govt. of Haryana took an action and imposed fine of Rs. 4,000/- based on my complaint. Ritu Wears have stopped such unfair business practices. I am quoting content of their two SMS recently received as part of their advertisement.
FLAT40VAN HEUSEN&LOUIS PHILIPPE BUY-2-40ALLEN SOLLY-B2G2G&J,BUY5-50-NO EXTRA GST"
While these retailers have been adapting to unfair business practices, incidentally some of the major retailers also seems to be adapting ethical business
practices as Snowhite, have clearly stated in their advertisement dtd.
10/01/2015 that “No Extra Vat” is chargeable
on discounted sale prices. Home Saaz does not charge any VAT on discounted
While Aditya Birla attempted to justify their charging of
extra VAT, Ritu Wears preferred to get the complaint compounded with Rs. 4,000/-
and agreed to stop such practices in future. Interestingly M/s JDS Apparels
Limited responded with a document from Retailers Association of India in March
2014 which supported that in case the dealers has displayed or advertised Vat
extra, the same can be charged extra.
However, State Commission and National
Commission did not agree to such statements made by the retailers during the
proceedings as brought out hereinafter.
While the issue of such unethical
business practices was being taken up with
the appropriate authorities as well social
media being aggressively used since March 2014 onwards, National Consumer
Disputes Redressal Commission in a
Revision Petition No. 3156 of 2016 (against the order dated 25/07/2016 in
Appeal No. 948/2015 of the State Commission, Punjab) in its judgment on 9th
February 2017 adjudicated with the same view point as brought out in my several posts on this blog. It adjudicated as:
“Learned counsel for
the petitioner in order to get rid of the aforesaid judgment has submitted the
facts of the aforesaid case before Coordinate Bench were different because in
the advertisement of the aforesaid case, flat discount of 40% was offered,
whereas the words ‘FLAT’ is missing in offer of the petitioner. Merely absence
of word ‘FLAT’ in the offer of the petitioner will not make any difference
because the discount of 30% on MRP by itself means that discount is ‘FLAT’ discount
on maximum retail piece. So far as judgments relied upon by the petitioner
concerned, those judgments are not applicable to the facts of the case because
those judgments relates to tax matters whereas in the instant case, we have to
see whether the petitioner has indulged in unfair trade practice by giving
misleading offer to the customers and thereafter overcharging them by charging
VAT on discount price.
In view of the
discussion above, we do not find any jurisdictional error or
irregularity in the impugned order which may call for interference in exercise
of revisions jurisdiction. Revision petition is, therefore, dismissed.”
State Commission has earlier stated
that “as per established law, on
Maximum Retail Price (MRP), Value Added Tax (VAT) cannot be charged. It was so
said by this Commission in the following cases:-
Stop and others Versus Jashan Preet Singh Gill and Others, first Appeal No. 210
of 2015 decided on 01.09.2015.
India Private Limited Vs. Ravinderjit Singh, Appeal N. 61 of 2016 decided on
Aero Club (Woodland) Vs. Harpreet Singh, Appeal No.318 of 2016 decided on
Vs. Heema Aggrawal, Appeal No. 331 of 2016 decided on 02.01.2017.”
The judgments of the
State Commission upheld by National Commission in Revision Petition have
explicitly adjudicated that the VAT cannot be charged on the discounted prices.
While a specific complaint against Shoppers Stop and others was adjudicated by
the State Commission, surprisingly the Shoppers Stop even preferring to
continue the same practice as on date. The Shoppers Stop was continuously being
reminded through social media about non-applicability of any tax on the
discounted sale prices.A consumer who
shopped at Shoppers Stop recently on 25/06/2017 vide Invoice No. 0679 has
reported charging of VAT of Rs. 67.83 on two items offered to be sold at 50%
and 40% discount respectively.
Some of the other cases which
have come to the notice of the author recently in addition to Shoppers Stop are
against Myntra.com (an e-commerce site), Jabong, Pantaloon, Lifestyle, Big Bazar Gen Nxt. The author has already raised complaints with State Controllers of Legal Metrology of Karnataka and Uttar Pradesh. It is worth mentioning that the retailers which earlier used to display "VAT Extra" immediately removed from their display after the judgement of Hon'able National Consumer Disputes Redressal Commission (NCDRC). However such activities after a gap of few weeks/months have restarted the unfair business.
(A link of this article is being emailed to the retailers for their reference, review and comment if any)