The National Consumer Disputes Redressal Commission in January 2017 had ruled that shops can’t charge extra VAT on items sold on discounted price.(HT File/Representaive image)
The National Consumer Disputes Redressal Commission in January 2017 had ruled that shops can’t charge extra VAT on items sold on discounted price.(HT File/Representaive image)

Consumer first: Zirakpur retailer penalised for charging VAT on discounted clothes

Vaibhav Goyal of Panchkula and Shifali Mahajan of Chandigarh had sought action against Chawla Fashions, which has its store at a Zirakpur mall.
Hindustan Times, Mohali | By Monica Sharma, Mohali
UPDATED ON DEC 18, 2017 01:14 PM IST

Pulling up a Zirakpur-based clothing retailer for fleecing two customers, the Mohali district consumer disputes redressal forum has asked it to refund the extra value added tax (VAT) charged on discounted items.

Vaibhav Goyal of Panchkula and Shifali Mahajan of Chandigarh had sought action against Chawla Fashions, which has its store at a Zirakpur mall.

“Charging of VAT on the discounted price by the shops is unfair trade practice and a deficiency in service,” said the forum while disposing of three complaints, including one against the online retailer Myntra.

The forum directed the retailer to refund the extra amount of VAT along with interest of 18% per annum from the date of payment to the complaints

The National Consumer Disputes Redressal Commission in January 2017 had ruled that shops can’t charge extra VAT on items sold on discounted price, “which is a rebate on the MRP that includes all taxes and cess”.

After the introduction of goods and services (GST) tax in July this year, VAT has been subsumed in it.Goyal, a resident of Sector 20, Panchkula, was Rs 59.82 as VAT on buying a shirt, which had the maximum retail price (MRP) of Rs 1,399. Chawla Fashions was offering  30% discount on the MRP during the sale in March last year. During the same sale, Mahajan of Sector 55 was charged Rs 64.03 VAT on a shirt that had an MRP of Rs 1,499. 

The forum directed the retailer to refund the extra amount of VAT along with interest of 18% per annum from the date of payment to both the complaints. The retailer will also have to  pay Rs 50,000 compensation and Rs 25,000  litigation cost to Mahajan and Rs 30,000 compensation and Rs 15,000 litigation cost to Goyal.

Online retailer penalised too

Meanwhile, on the complaint of Kartik Sharma of Nayagaon, a Delhi-based firm and online retailer Myntra Designs Private Limited have also been penalised.

Sharma had bought a shirt from Shreyash Retail Private Limited, New Delhi, through Bengaluru-based Myntra in January 2017. The company was offering up to 70% discount, but Sharma was charged Rs 5.25 VAT/CST on the discounted price. The forum directed the retailer to refund to Rs 62.89, ie excess charges of VAT/CST, and Rs 10,000 for mental agony, harassment and cost of litigation.

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