Can Vat be Charged on MRP?

But first know why they do it?

It is part of their promotional policy to attract/allure gullible customers & create misleading belief of hefty discounts declared by them often, which comes out to be illusion later. Once you are there on the billing counter then you don’t have any other alternative then to pay a good amount of VAT illegally imposed.

This question now haunts everyone and force us to double check the amount on billing counters. Our heart starts beating faster when we see the machine rolls pinning the amount from computer. This post answers the question in a most exhaustive and legally valid way which otherwise has left nothing to be stated. 

We’ll go into such depth while explaining the VAT matter to our readers.

The BIG answer to this NO in absolute terms. Period. No one can charge any tax on MRP. This is being stated in various judgments below and reiterated in many number of cases even now.

 Let’s have a look at them:

1 Gautam Seonie vs. Blackberry DF-II, Chandigarh Decided on 19.05.2016

MRP includes TAX and other component, then VAT cannot be charged separately.

2 Blackbird Showroom vs. Chandru (HC) Appeal, Bangalore on 16.01.2014

It is against the trade practice to charge VAT on MRP.

3 Shoppers Stop vs. Jashanpreet, Appeal State Commission Chandigarh on  1.9.2015

No one can charge above MRP & MRP includes VAT/Other taxes. When MRP is inclusive of taxes, VAT cannot be charged separately.

4 Benetton Pvt. Ltd vs. Ravinderjit , Appeal, Commission , UT, Chandigarh on 18.02.2016

Charging VAT on MRP is against the Trade Practice.

5 Kunal Kinra vs. Raymond DF-I, Chandigarh on 19.05.2016

6 Shyam Sunder vs. ADI Sports & Reebok on DF-II on 14.01.2016

It is not legal to charge any tax on the MRP when it is specifically mentioned that “inclusive of all taxes.”

Findings of the Consumer courts in all cases- Party indulged in unfair trade practice and found deficient in rendering service to the public at large. Courts have clearly found distinction between ‘Actual Price’ and ‘Retail Price’. It is an offence to charge more than MRP as it already includes taxes like VAT. It is just like double taxing the consumers.

All the list of these judgments are squarely applicable to the current situation prevailing i.e. VAT on MRP.

Conclusion- None can add a penny to the MRP. It can only be done when the price does not include taxes and the tag doesn’t say inclusive all taxes. Also, once it is clearly displayed MRP (Inclusive taxes ), VAT cannot be added afterwords.

Now be watchful when you see those flashy adds Discount, Discounts 40, 50, 60…. % Check the bill and see whether VAT is added on MRP or not. Still if you feel aggrieved by the same VAT issue, please feel free to contact me at advocatesatish7@gmail.com