Overcharging Rs3 on product costs retail store Rs4K

Ludhiana: 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 Rs3.14 from a Pathankot resident. Of the Rs4,000 fine, the forum — comprising president GK Dhir and member Jyotsna Thatai — asked Lifestyle International Private Limited, MBD Neopolis, Ferozepur Road, Rajguru Nagar, to pay Rs2,000 as compensation for mental harassment and agony, while it will have to pay an equal amount as litigation expenses to customer Rohit Sharma of Raipur Kathlaur in Pathankot.
The complainant — in his complaint to the forum on 13 November last year — said he had purchased one product from the store on 22 July 2017 by paying an amount of Rs67. The maximum retail price (MRP) of the product, inclusive of all taxes was Rs90. After giving a discount of 30%, the discounted price payable was Rs63. But the seller charged GST at the rate of 5% of Rs3.14 from him, which included CGST (Central GST) and SGST (State GST) of 2.5% each. That practice of charging GST on discounted price is alleged to be an ‘unfair trade practice’, and that is why, the complainant sought refund of the excess charged GST amount of Rs3.14, along with compensation on account of mental and physical harassment of Rs25,000, plus litigation expenses of Rs15,000.

The respondent, in the reply, said: “As tax was charged according to rules, and as such allegation of deficiency in service is denied, but by claiming that the sale price defined under Central Sales Tax Act and Punjab VAT Act 2005 means the amount payable to a dealer as consideration for sale of any goods, minus any sum allowed as cash discount, according to the practice normally prevailing in the trade. The opposite party (OP) is thus entitled to charge and collect GST after deducting discount from the printed MRP, and the same to be taken as the sale price. On the advertisement of discount offer, it was clearly mentioned ‘tax extra’. The complainant might have missed noticing this fact. In case the complainant did not agree with the OP for charging tax, then the invoice should have been cancelled, but the complainant chose to raise no concern in that respect, and as such, the complaint is alleged to be filed with malafide intention, and for unjust enrichment.”

The forum observed that the practice of charging tax on the discounted price having MRP, inclusive of all taxes, has been deprecated by the National Consumer Disputes Redressal Commission, New Delhi. It held that the practice of charging tax on the discounted price of products having MRP, inclusive of all taxes, in this case certainly is unfair trade practice. The forum directed that the extra amount charged be refunded at 6% interest per annum from the date of purchase until payment, besides asking it to pay compensation and litigation expenses.