Abids Brand Factory fined Rs 5,000 for charging GST on discounted goods

Complainant S. Prabhakar Reddy, a resident of Old Malakpet in June 2019 purchased one trouser and two T-shirts from the Abids showroom. The showroom was offering a discount of 40% on trousers, and 50% and 20% on the T-Shirts.

"While the actual total amount for one trouser and two T-shirts was Rs. 2,355.70 after discount, they collected Rs.2456 which included GST and Rs.10 for the carry bag with a logo," said the complainant.

The complainant said an extra amount of Rs.90.30 was collected on the discounted price and the additional charges of Rs.10 collected towards the carry bag amounts to unfair trade practice.

The company contended that the discount price was exclusive of applicable taxes and the same was prominently displayed showing "tax will be charged extra" and indicated by * mark in their shops. The company said it is clearly mentioned in the tax invoice that "applicable taxes will be charged on the discounted price" and hence it is legally valid and justified in law.

After examining the documents and evidence, the commission observed that the total savings as shown on the invoice is Rs.1537.30. However, the total amount on MRP of the three items purchased is Rs.3,893 and the total amount after the discount is Rs.2355. The amount paid by the complainant is Rs.2456 which brings down the total savings for the complainant to Rs.1,437 only.

"It has been seen that there is misconceived/deceitful trend among quite a few retailers. They charge extra G.S.T. over and above the net M.R.P arrived at after offering discounts on certain products. However, such a practice is clearly in gross violation of the law since M.R.P is inclusive of all kinds of taxes (including G.S.T.) and no other tax on the said M.R.P is to be levied," observed the commission.

The commission said that as a natural corollary, no G.S.T will be applicable on the discounted M.R.P if the discount offered on the Maximum Retail Price of the product is already inclusive of G.S.T. (CGST as well as SGST).

"Charging G.S.T on the net M.R.P. arrived at after giving the discount on the product would clearly mean charging and collecting 'extra G.S.T' and amount to the legal plunder of `Double Taxation'. This amounts to Unfair Trade Practice as well as Deficiency in Service on the part of the retailer," said the commission.

Under the Consumer Goods (Mandatory Printing of Cost of Production and Maximum Retail Price) Act, 2006, MRP- means such price at which the product shall be sold at retail, and such price shall include all taxes levied on the product.

The advertisement 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, tantamount to unfair trade practice.

On the issue of charging Rs.10 for the carry bag, the commission said that in pursuance of the Plastic Waste Management (Amendment) Rules, 2018, the `explicit pricing of carry bags' has been omitted, even the charging of eco-friendly carry bags with the company logo is not only unfair trade practice but also undue profiteering at the expense of the common man.

The commission asked Brand Factory to refund the amount of Rs.90.30 collected towards GST and other taxes on the discounted prices and return Rs.10 collected towards the cost of the carry bag. The commission also asked the factory to pay compensation of Rs.5,000 to the consumer and Rs.1000 towards the cost of litigation. It also asked the factory to stop charging for the carry bags forthwith.