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
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
Sir The fact is that retailers are still charging Taxes on discounted prices. The consumers are not coning forward to raise complaints as a result of which unfair business ig going on unchecked. The consumers who are escalating complaints in very small number are not being refunded the excess amount so charged. Controller of Legal Metrology to whom I have escalated my complaints alongwith copy of NCDRC order are yet to initiate action. Two suggestions from my side . 1. Let consumers flood the office of State Controllers of Legal Metrology with complaints 2. Initiate class action against retailers for which if the consumers desire I am prepared to come forward and for which I would require certain sizeable number of complaints. I would advise other consumers to consider raising complaints and making aware of their contacts in case we consumers desire to check on unfair business. more
Aug 09
this is a serious concerns. Retail outlets are actually taking the undue benefit in the name of GST. This needs to be addressed on priority. more
Aug 10
I went to buy sweets on rakhi and found that the price of one kg has gone up by almost Rs200-150 in the name of GST. This is sheer looting of customers. Let us start a social media campaign against sweet shops to prevent this sort of looting of customers. Govt please note. more
Aug 09
Section 4A of Central Excise Act, 1944 deals with the valuation of excisable goods with reference to retail sale price. Section 4A (1) provides that the Central Government may, by notification in the Official Gazette, specify any goods, in relation to which it is required, under the provisions of the Legal Metrology Act, 2009 or the rules made there under or under any other law for the time being in force, to declare on the package thereof the retail sale price of such goods, to which the provisions of 4A (2) shall apply. Section 4A (2) provides that where the goods specified under section 4A (1) are excisable goods and are chargeable to duty of excise with reference to value, then, notwithstanding anything contained in section 4, such value shall be deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may allow by notification in the Official Gazette. more
Aug 09
