Charging GST above Discounted MRP is unfair trade practice

Charging Goods and Services Tax (GST) on a discounted product has cost a retail store dear as the District Consumer Disputes Redressal Forum has imposed a fine of Rs4,000 on it for overcharging Rs16.92 from a resident of Jalauli in Panchkula. Of the total fine, the forum — comprising president GK Dhir and member Vinod Gulati — asked Firstcry.com Mahindra Retail Private Limited, Mall Road, beside Surya Tower, to pay Rs2,000 as compensation for mental harassment, and an equal amount as litigation charges to customer Ram of VPO Jalauli in Barwala tehsil of Panchkula district.

The complainant, in his complaint to the forum on 13 March said he had purchased one product from the store on 12 February this year by paying an amount of Rs157.92 through an invoice. The maximum retail price of the product, inclusive of all taxes, was Rs175. After discount of Rs34, the discounted price payable was Rs141. But the seller charged GST at the rate of 12% of Rs16.92 charged from him. That practice of charging GST on discounted price is said to be an ‘unfair trade practice’, and that is why the complainant sought refund of excess charged GST amount of Rs16.92, along with compensation on account of mental and physical harassment of Rs20,000, and litigation expenses of Rs10,000. The respondent was ex-parte in this case, because no one turned up for it.

The forum observed that the act of charging VAT/GST on discounted MRP (inclusive of all taxes) has been deprecated by the National Consumer Disputes Redressal Commission, New Delhi. This practice of charging VAT was ‘unfair trade practice’.

The forum observed that in view of the law laid down in cited cases, it was obvious that an unfair trade practice was adopted by the opposite party (seller) in charging GST of Rs16.92, after giving a discount on the MRP. It added that in view of the adoption of this unfair trade practice, the complainant suffered some mental harassment and agony, and as such, he was entitled to compensation, along with litigation expenses. The forum directed that the extra amount charged be refunded at 6% interest per annum from the date of purchase, besides asking it to pay compensation and litigation expenses.

UNFAIR TRADE PRACTICE

* Complainant Ram said he had purchased the product from the store on 12 February this year.

* The maximum retail price of the product, inclusive of all taxes, was Rs 175.

* Charging GST on a discounted product is said to be an ‘unfair trade practice’ more