Alleged unfair business practices of Retailers like Home Saaz, Lefestyle, Shoppers Stop, Pantaloons and others charging taxes on discounted sale price

Several posts have been written on this blog from 2014 onwards about unfair business practices of the retailers like Home Saaz, Lifestyle, Pantaloons, Shoppers Stop and others on charging of taxes on discounted sales prices. Some of the retailers have even been prosecuted but despite prosecution continue to carry out unfair business.  Recently on a complaint against Home Saaz about adoption of the similar practices, the Home Saaz was challaned for the same.

In a recent judgment on 06/02/2018, The Hon'able District Consumer Forum, Ludhiana in a complaint number No. 741 of 11.10.2017 of Mr. Brij Mohan, Chandigarh vs. The Mandhana Retail Ventures Limited, Being Human-Silver Arc. Gr.Floor, Store No.10, Gurdev Nagar, Near Arti Chowk, Firoz Road, Ludhiana-141001 has termed such practices as unfair trade practices and have imposed a cost of Rs. 4,000/- to be paid by the company to the consumer. A full judgement of the same is quoted below which can be used by the consumers who are being charged of such taxes on discounted sales:

"1. Complainant purchased one product bearing MRP of Rs.1779/- from Op because of given offer of 30% discount. After that discount, the price came to Rs.1259.30P, but by charging VAT @6.05% of amount of Rs.76.19P, amount of Rs.1335/- charged from the complainant. Charging of VAT on discounted price alleged to be an unfair trade practice and that is why, this complaint for seeking refund of excess charged VAT amount of Rs.76.19P along with compensation on account of mental and physical harassment of Rs.25,000/- and litigation expenses of Rs.15,000/-.

2. OP is ex-parte in this case.

3. Counsel for complainant in ex-parte evidence tendered affidavit Ex.CA of complainant along with documents Ex. C1 and Ex.C2 and thereafter, closed the evidence.

4. Written arguments not submitted, but oral arguments of counsel for complainant heard. Records gone through carefully.

5. Perusal of affidavit Ex.CA of complainant along with retail invoice Ex.C1 and tag on the product Ex.C2 shows as if the product purchased by the complainant was bearing MRP of Rs.1799/-(inclusive of all taxes). In retail invoice Ex.C1, it is mentioned as if the discount of Rs.549.70P given and VAT of amount of Rs.76.19P charged. As the VAT has been charged on discounted price, despite the fact that MRP was inclusive of all taxes and as such, OP adopted unfair trade practice, due to which, complainant suffered mental tension, agony and harassment, resulting in institution of this complaint by him.

6. As per law laid down in cases titled as M/s. Aero Club (Woodland) through its Manager vs. Rakesh Sharma, bearing Revision No.3477 of 2016 decided on 4.1.2017 by the Hon'ble National Consumer Disputes Redressal Commission, New Delhi and Ethnicity vs Heena Aggarwal-2017(1)CLT-621(Chandigarh State Consumer Disputes Redressal

Commission ), in case, discount on MRP is given under circumstance that MRP is inclusive of all taxes, then act of deliberately charging VAT and other taxes on price after discount is an unfair trade practice.

7. In view of adoption of unfair trade practice, complaint deserves to be allowed with direction to OP to refund the excess charged amount of Rs.76.19P with interest @6% per annum w.e.f. the date of purchase namely 29.6.2017 till payment.

8. Therefore, as a sequel to the above discussion, complaint allowed ex-parte in terms that OP will refund excess charged amount of Rs.76.19P(Rs.Seventy six & ps.nineteen only) with interest @6% per annum w.e.f. 29.06.2017 till payment. Compensation for mental harassment of

Rs.2,000/- (Rupees Two Thousand only) and litigation expenses of Rs.2,000/- (Rupees Two Thousand only) more allowed in favour of complainant and against OP. Payment of this amount of compensation and litigation expenses be made within 30 days from the date of receipt of copy of

order. Copies of order be supplied to parties free of costs as per rules."