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Garment outlet fined for charging VAT

The district consumer disputes redressal forum has directed a garment retailer to refund Rs 576 charged as VAT from a customer as the price tag of the product read that the maximum retail price (MRP) was inclusive of all taxes. The trader has also been asked to pay Rs 1,000 as compensation and Rs 500 as litigation expenses to the customer.
Jaikaran Singh, a resident of Noordi Adda village in Tarn Taran, had filed a complaint against United Colors of Benetton stating that he had purchased garments from the opposite party. The price of three items was Rs 9,797. As the retailers was offering 50 per cent discount, the net price came down to Rs 4,898. According to Jaikaran, the retailer charged Rs 576 as VAT on the discounted price even though the price tag read “MRP inclusive of all taxes”.
The opposite party in its reply stated that a discounted price does not become a new MRP. It also stated that the question whether the VAT was rightly assessed and accounted for was a matter of assessment by the appropriate authority under the VAT Act.
The forum observed that under Section 2 (d) of the Consumer Goods (mandatory printing of cost of production and maximum retail price) Act, 2014, the MRP printed on the goods means the price at which the consumer goods shall be sold in retail shall include all taxes levied on the goods. “Having read ‘flat discount’ advertisement, a consumer will be tempted to buy the goods under a bonafide belief that he will get a flat discount on the MRP,” the forum stated.
The forum ruled that it was an unfair trade practice since the advertisement was misleading.\
Charged tax on MRP
• Jaikaran Singh of Noordi Adda village bought clothes from United Colors of Benetton for Rs 9,797.
• Since the outlet offered 50% discount, the net price came down to Rs 4,848.
• But the outlet charged Rs 576 as VAT on the discounted price even as the MRP read ‘inclusive of all taxes’.
• Consumer forum terms it a misleading advertisement and unfair trade practice.