The Most Searched Question on Quora is, Why shops charge VAT on Discounted items has now got an official answer. The National Consumer Disputes Redressal Commission NSDRC ruled that Shops selling products at discount prices cannot charge VAT ( Value Added Tax). Shoppers don’t need to pay VAT on buying discounted items
The Apex Body stated that no other tax including VAT can be collected from the buyers.
As per the Section 2(d) of Consumer Goods Act, the rebate was on the MRP, which includes all taxes and cess said the NCDRC
The NCDRC gave this order last month after the state forums had rejected the plea of Woodland franchises in Chandigarh and Delhi. It all started when the Woodland company refused to pay the VAT amount of Rs 119.85 which was charged on jacket bought at 40% discount on MRP.
Justice D K Jain, NCDRC president, stated that “the advertisement in the above form is nothing but an allurement to gullible consumers to buy the advertised merchandise at a lower bargain price, which itself was not intended to be the real bargaining price and, therefore, tantamount to unfair trade practice.”
“The defence of the petitioners that they had charged VAT as per law is of no avail as the issue, viz misleading advertisement resulting in unfair trade practice, is concerned,” the order said.
The apex court refused to cancel the judgement given by the state and district forums. They have ruled that discount falling short of “Flat 40%” on the MRP would amount to unfair trade practice.
Earlier the district forum had asked the shop owners to refund the extra amount to the petitioner along with compensation ranging between Rs 2,000 and Rs 5,000, and other legal charges.