MRTPC slams Tata for 'embezzling'
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MRTPC slams Tata for 'embezzling'

NMRTPC has slammed Tata Motors for over booking and 'embezzling' Govt money by retaining taxes at the time of mega-launch of its first car Indica in 1999.

india Updated: Apr 05, 2006 13:29 IST

The Monopolies and Restrictive Trade Practices Commission has slammed auto giant Tata Motors for over booking and "embezzling" government money by retaining taxes at the time of mega-launch of its first car Indica in 1999.

It opened bookings from January 17-23, during which it recieved 1.13 lakh orders and collected Rs 3,216 crore. The amount included excise duty, sales tax and transportation charges, which the company did not submit to the government exchequer immediately.

"The realisation of sales tax and keeping the same with it not only amounts to unfair trade practice, but also amounts to temporary embezzlement of government money," the Commission Bench headed by Justice BK Rathi said.

"The respondent has earned unlawful gains by realising this amount from the customers and not transferring the same to the government immediately," the Bench said.

MRTPC observed that at the time of launch the company had a production capacity of 10,000 cars in the first phase and planned to enhance it to 50,000 units in the next phase.

Later Tata motors (then Telco), returned the booking amount to 32,886 customers with 11 per cent interest after cancellation of their orders.

But three applicants whose orders were cancelled filed complaint in the Commission accusing that Tata Motors had no right to charge the entire price along with taxes before commencing production and the same should have been charged at the time of delivery.

The Commission then referred this matter to its investigative arm DGIR (Director General of Investigation and Registration). In its report, DGIR supported the allegations and said the company's intention was to deliver only 10,000 cars in the first instance.

Further, DGIR said the booking order was silent on two points - the precise delivery dates and the quantum of vehicles to be actually delivered during the first year.

However, Tata Motors contended that it didn't anticipate the overwhelming response for its cars and there were no government norms as to what amount can be accepted at the time of booking.

Besides, its sole purpose of collecting the total price including the excise duty and sales tax was to discourage speculative buyers and get the accurate assessment of the genuine demand for Indica cars, the company said.

Dismissing Tata's arguments, the Commission said that taking the entire amount from customers was wrong and was a clear case of unfair trade practices 'prejudicial' to consumers.

"The sales tax and excise duty are levies that accures to the government. Respondent (Tata Motors) is not justified in levying the sales tax and excise duty prematurely and to park the same with itself.

"The sales tax should be transferred to the government accounts immediately as and when it is realised," the Commission said and asked the auto major to submit immediately the entire amount collected as sales tax and excise duty in the government's exchequer.

First Published: Apr 05, 2006 13:02 IST