Secunderabad Brand Factory asked to pay customer Rs. 10K for charging GST on discounted price

The complainant, Srikhande Umesh Kuma, a resident of Jambagh, visited the Brand Factory which offered a 40 per cent discount on garments. He purchased a pair of jeans and the printed MRP on it was Rs. 2,499 (inclusive of GST). After a 40 per cent discount, the final price came down to Rs. 1,499.40. However, the opposite party charged Mr. Kuma Rs. 1,594.38, Rs. 74.88 more than the final price in the name of 5 per cent GST.

The complainant also alleged that the outlet has charged Rs. 10 for a paper bag with the Brand Factory logo, turning customers into advertising agents. He also said that the opposite party did not put any display board stating that paper bags with the shop's logo are available for purchase. Further, he said customers are informed only at the selling counter regarding availability of the paper bags for purchase.

The Brand Factory contended that there is no GST provision for the determination of value on the MRP. "GST would be stated to have been determined based on the transaction value. The transaction value inclusive of the GST would be charged over and above the discount. The GST charged on the 40% discount price of the sold goods, which is stated to be in accordance with the law, there is no deficiency in service or adoption of unfair trade practice on its part in the said transactions," it said.

Regarding the paper bag, it said there was no deficiency in service or indulgence of unfair trade practice on its part.

After observing all the documents and evidence, the commission observed that the complainant relied upon the decision made in the case of Myntra Designs Pvt. Ltd. (vs) Shrays Patel Pvt. Ltd. in May 2019. It was held that "charging GST extra from the complainant clearly proves deficiency in service and unfair trade practice on the part of the opposite party".

Also, the forum observed that NCDRC in the case of Big Bazar (vs) Sohel Bhavan held in December 2020 that "not giving adequate prominent prior notice or information to the consumer before he makes his choice of patronizing the retail outlet, and before he makes his selection for purchase, imposing additional cost of carry bags at the time of making payment, after the selection has been made, forcing to buy carry bags without disclosing their salient specifications at price as fixed by the opposite party, putting the consumer to embarrassment and harassment, burdening the consumer with additional cost, in such a way and manner, is decidedly unfair and deceptive".

The commission on Friday said, "The opposite party ought to have provided the carry bag to the complainant free of cost. The action of the opposite party certainly amounts to deficiency in service and the adoption of unfair trade practice."

The commission asked the Brand Factory to pay Rs. 74.98 to the complainant towards excessive GST and Rs. 10 paid by the complainant towards the cost of the paper carry bag. It also asked the retail outlet to pay Rs. 10,000 towards compensation for causing mental agony to the customer and Rs. 5,000 towards costs of the litigation.