Here is the judgement against TAX for discounted price.
GST is within MRP
Latest decision of NCDRC delivered in Feb 2017 on the subject is reproduced below:
REVISION PETITION NO. 3477 OF 2016
(Against the Order dated 20/10/2016 in Appeal No. 287/2016 of the State Commission
Chandigarh)
1. M/S. AERO CLUB (WOODLAND)
THROUGH ITS MANAGER, SCO-25, SECTOR 20-
D, CLOTH MARKET,
CHANDIGARH
UT ...........Petitioner(s)
Versus
1. RAKESH SHARMA
R/O. H.NO. 3342, SECTOR 27-D,
CHANDIGARH ...........Respondent(s)
BEFORE:
HON'BLE MR. JUSTICE D.K. JAIN,PRESIDENT
HON'BLE MRS. M. SHREESHA,MEMBER
9. We have heard Mr. Rajesh Mahna, Learned Counsel appearing for the Petitioners.The main thrust of the submissions made by the Learned Counsel is that having chargedVAT strictly as per the provisions of the State VAT Act and Legal Meteorology Act, theFora below was not justified in holding that the Petitioners had indulged in unfair trade
practice and there was deficiency in service on their part in charging VAT on the discountedprice.
10. Having perused the documents on record, including the publicity material,announcing the sale, declaring “Flat* 40% OFF” on Woodland Shoes and Apparels, as alsothe invoice, referred to above, we are of the view that the Petitions are without anysubstance.
11. The short question falling for consideration is whether having announced a discountof “FLAT* 40%” on selected merchandise, which in actual terms works out to less than
40% on the MRP, the Petitioners had indulged in unfair trade practice and/or there was anydeficiency on their part in charging VAT on the discounted price of the merchandise.?
12. The expression “unfair trade practice”, as defined in Section 2 (r) of the Act is of verywide amplitude. Clause (2) of Sub-Section (r) of the Act, relevant for our purpose, reads as
follow:-“(2) permits the publication of any advertisement whether in any newspaperor otherwise, for the sale or supply at a bargain price, of goods or services
that are not intended to be offered for sale or supply at the bargain price, orfor a period that is, and in quantities that are, reasonable, having regard to thenature of the market in which the business is carried on, the nature and size
of business, and the nature of the advertisement.
Explanation—For the purpose of clause (2), "bargaining price" means:-
(a) a price that is stated in any advertisement to be a bargain price, by reference to an ordinary price or otherwise, or
(b) a price that a person who reads, hears or sees the advertisement, wouldreasonably understand to be a bargain price having regard to the prices atwhich the product advertised or like products are ordinarily sold;”
13. Explanation to the clause, defining “bargaining price”, leaves little scope for doubt that the advertisement offering “FLAT* 40%’’ off on the select merchandise was the
bargaining price within the meaning of clause (2) of Section 2 (r) of the Act. In our view,any person who sees the advertisement would reasonably understand that these items are being sold at “FLAT* 40%” discount. Although it is true that the word “FLAT” has an asterisk, appended to it, purporting to be a pointer to an annotation or footnote, but a bare comparison of the font size of “40%” and the font size of the corresponding terms and conditions mentioned in the footnote, clearly shows that the goods in question were not
intended to be sold at a discount of FLAT 40%, the offered bargain price. For the purpose of ready reference and better clarity, the scanned picture of the advertisement, widely
publicized, is reproduced here under:-
14. In our opinion, the advertisement in the above form is nothing but an allurement to gullible Consumers to buy the advertised merchandise at a cheaper bargain price, which
itself was not intended to be the real “bargaining price” and, therefore, tantamounts to unfair trade practice, as found by both the Fora below. Significantly, under Section 2(d) of the
Consumer Goods (Mandatory Printing of Cost of Production and Maximum Retail Price)Act, 2014, the “Maximum Retail Price” printed on the goods, a mandatory labelling requirement, at the relevant time, for pre-packaged goods, means “such price at which the consumer goods shall be sold in retail and such price shall include all taxes levied on the
goods.” In that view of the matter, having seen the word “FLAT” in the advertisement, a consumer would be tempted to buy the goods under a bonafide belief that he would get a
flat 40% off on the MRP. In our opinion, therefore, the defence of the Petitioners that they had charged VAT as per law is of no avail in so far as the issue at hand, viz. misleading advertisement, resulting in unfair trade practice, is concerned. We are in complete agreement with the Fora below that any discount falling short of “Flat 40%” on the MRP would amount to unfair trade practice, as defined in the Act.
15. In view of the above, we do not find any jurisdictional error in the impugned order warranting interference in our limited Revisional Jurisdiction. Resultantly, all the Revision
Petitions fail and are dismissed accordingly. more
GST is within MRP
Latest decision of NCDRC delivered in Feb 2017 on the subject is reproduced below:
REVISION PETITION NO. 3477 OF 2016
(Against the Order dated 20/10/2016 in Appeal No. 287/2016 of the State Commission
Chandigarh)
1. M/S. AERO CLUB (WOODLAND)
THROUGH ITS MANAGER, SCO-25, SECTOR 20-
D, CLOTH MARKET,
CHANDIGARH
UT ...........Petitioner(s)
Versus
1. RAKESH SHARMA
R/O. H.NO. 3342, SECTOR 27-D,
CHANDIGARH ...........Respondent(s)
BEFORE:
HON'BLE MR. JUSTICE D.K. JAIN,PRESIDENT
HON'BLE MRS. M. SHREESHA,MEMBER
9. We have heard Mr. Rajesh Mahna, Learned Counsel appearing for the Petitioners.The main thrust of the submissions made by the Learned Counsel is that having chargedVAT strictly as per the provisions of the State VAT Act and Legal Meteorology Act, theFora below was not justified in holding that the Petitioners had indulged in unfair trade
practice and there was deficiency in service on their part in charging VAT on the discountedprice.
10. Having perused the documents on record, including the publicity material,announcing the sale, declaring “Flat* 40% OFF” on Woodland Shoes and Apparels, as alsothe invoice, referred to above, we are of the view that the Petitions are without anysubstance.
11. The short question falling for consideration is whether having announced a discountof “FLAT* 40%” on selected merchandise, which in actual terms works out to less than
40% on the MRP, the Petitioners had indulged in unfair trade practice and/or there was anydeficiency on their part in charging VAT on the discounted price of the merchandise.?
12. The expression “unfair trade practice”, as defined in Section 2 (r) of the Act is of verywide amplitude. Clause (2) of Sub-Section (r) of the Act, relevant for our purpose, reads as
follow:-“(2) permits the publication of any advertisement whether in any newspaperor otherwise, for the sale or supply at a bargain price, of goods or services
that are not intended to be offered for sale or supply at the bargain price, orfor a period that is, and in quantities that are, reasonable, having regard to thenature of the market in which the business is carried on, the nature and size
of business, and the nature of the advertisement.
Explanation—For the purpose of clause (2), "bargaining price" means:-
(a) a price that is stated in any advertisement to be a bargain price, by reference to an ordinary price or otherwise, or
(b) a price that a person who reads, hears or sees the advertisement, wouldreasonably understand to be a bargain price having regard to the prices atwhich the product advertised or like products are ordinarily sold;”
13. Explanation to the clause, defining “bargaining price”, leaves little scope for doubt that the advertisement offering “FLAT* 40%’’ off on the select merchandise was the
bargaining price within the meaning of clause (2) of Section 2 (r) of the Act. In our view,any person who sees the advertisement would reasonably understand that these items are being sold at “FLAT* 40%” discount. Although it is true that the word “FLAT” has an asterisk, appended to it, purporting to be a pointer to an annotation or footnote, but a bare comparison of the font size of “40%” and the font size of the corresponding terms and conditions mentioned in the footnote, clearly shows that the goods in question were not
intended to be sold at a discount of FLAT 40%, the offered bargain price. For the purpose of ready reference and better clarity, the scanned picture of the advertisement, widely
publicized, is reproduced here under:-
14. In our opinion, the advertisement in the above form is nothing but an allurement to gullible Consumers to buy the advertised merchandise at a cheaper bargain price, which
itself was not intended to be the real “bargaining price” and, therefore, tantamounts to unfair trade practice, as found by both the Fora below. Significantly, under Section 2(d) of the
Consumer Goods (Mandatory Printing of Cost of Production and Maximum Retail Price)Act, 2014, the “Maximum Retail Price” printed on the goods, a mandatory labelling requirement, at the relevant time, for pre-packaged goods, means “such price at which the consumer goods shall be sold in retail and such price shall include all taxes levied on the
goods.” In that view of the matter, having seen the word “FLAT” in the advertisement, a consumer would be tempted to buy the goods under a bonafide belief that he would get a
flat 40% off on the MRP. In our opinion, therefore, the defence of the Petitioners that they had charged VAT as per law is of no avail in so far as the issue at hand, viz. misleading advertisement, resulting in unfair trade practice, is concerned. We are in complete agreement with the Fora below that any discount falling short of “Flat 40%” on the MRP would amount to unfair trade practice, as defined in the Act.
15. In view of the above, we do not find any jurisdictional error in the impugned order warranting interference in our limited Revisional Jurisdiction. Resultantly, all the Revision
Petitions fail and are dismissed accordingly. more
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Oct 31
If generic meaning of MRP is " everything included ", then all taxes are included, be it VAT or GST. more
Aug 11
Krishnan ..thanks. Can I please have a pdf copy of the judgement at my email id pls? apurvmajumdar@yahoo.com more
Aug 17
You are right Sir. But only one can be included. Either GST or VAT. If the MRP is inclusive of VAT then either sell the product at MRP inclusive of GST or reduce VAT component and then add GST and sell. The justification in that case would be that, GST rate could be different than VAT rates. But, if the product is inclusive of VAT, it should be sold at MRP without any change and inclusive of GST. Whatever loss, if any, should be borne by the retailer or manufacturer. more
Aug 11
Dear Sri K.M.Raman, It is my understanding that this order of NCDRC doesn't pronounce any order on the issue of (a) whether MRP as printed mandatorily on packaged goods includes GST (b) whether there is any variation in GST payable in cases of discounted price. This order only upholds the order passed by Appellate commission, the contents of which are not known. Before the advent of GST, that is when VAT or MODVAT was in force, I am aware of many items (can't quote specifics) where MRP was printed with the remarks "Local Taxes Extra". This was because (a) Applicable VAT varied from state to state (b) perhaps, even transportation costs varied. While the first point has now been resolved with the advent of GST, the second still remains. To further elucidate, please check the prices of petrol & Diesel and the variation in their rates from Town to Town, which is due to transportation costs. 2. It is quite possible that MRP (being Maximum) can include the maximum transport cost as against actual and thus there will be uniformity in MRP all over the country. In such an eventuality, MRP can and perhaps shall include GST and thus is not chargeable over and above. more
Aug 10
Now that GST has been implemented all MRPs of all 'packaged goods' would contain the GST component and there cannot be a GST over and above the MRP more
Aug 17
VAT is levied on a predetermined price whereas GST is levied on the actual selling price as it is a transaction tax. more
Aug 11
Atul ji, If generic meaning of MRP is ' everything included ', then all taxes are included, be it VAT or GST ???? more
Aug 11
Is this suggesting that in case of flat discount only does this judgement applies i.e no further tax should be applied on top of the discounted price? unless i have understood incorrectly. more
Aug 10
I also understand the same. This issue I had also raised earlier that departmental stores like Big Bazar, Pantaloons etc. are following the same. They are giving discounts on the MRP and then charging VAT (earlier)/ GST (now). more
Aug 10
