Not providing consumer with discount offered through advertisement is unfair trade practise

Aero Club Vs. Ravinder Singh Dhanju

The Petitioner is engaged in the business of selling Woodland Brand of shoes and apparels. The complainant/respondent went to a store of the Petitioner which had allegedly offered a discount of 35% on purchase of T shirt having maximum retail price of Rs. 2195 (inclusive of taxes). According to the Complainant, though the Petitioner had offered a flat 35% discount on the maximum retail price (inclusive of taxes), it charged a sum of Rs. 1498/- from him whereas, the price after deducting 35% discount comes to Rs. 1426.75. The Petitioner, according to the complainant had charged double VAT amount from him. It is also alleged that despite the request made by the complainant, the Petitioner refused to cancel the transaction, taking a plea that the invoice had already been generated. It was alleged that the petitioner had indulged into unfair trade practice, by charging double VAT amount. The complainant therefore, approached the concerned District Forum by way of a consumer complaint, seeking compensation quantified at Rs. 75,000 besides refund of the overcharged amount of Rs. 71.35. The District Forum having ruled in favour of the complainant, the Petitioner approached the concerned State Commission by way of an appeal. The said appeal having been dismissed vide impugned order, the Petitioner is before this Commission by way of instant revision petition. 

When an advertisement is given promising a discount of say upto 10%/20%/30%/40%/50% on a product, this is an invitation to the consumer to buy the product at the aforesaid discount. Admittedly, VAT is not charged extra when the product is sold without a discount, since it is inbuilt in the MRP displayed on the product. If VAT is charged extra, while selling a product on discount, it would be an unfair trade practice as the customer would not get the promised discount since the quantum of the discount would get reduced to the extent of the amount of VAT is charged extra from him. If a consumer is lured to the store on the promise that, he would be offered a discount of say upto 40%, there is no reason why the discount as decided by the seller should not be actually made available to him. It is for the seller to decide how much discount, if any, it want to offer on its products. If the seller wants to offer say 10% discount, the consumer who has been lured to its store on the promise of such a discount must necessarily get that discount and it should not be reduced by charging extra VAT on the discounted price, when VAT is not charged extra on a product sold without discount. The consumer coming across an advertisement, promising a product on discount visits the store in the belief that the promised discount would be extended to him if he purchases a discounted product. It would be extremely unfair to him if the discount offered to him is reduced to the extent of the amount of the VAT. In such a case it would be immaterial whether the seller is offering a flat discount of say 40%/35% or it is promising a discount, say upto 35%/40%. 

In terms of Section 2(1)(r)(2) of the Consumer Protection Act, 1986 publication of an advertisement for sale at a bargain price of goods that are not intended to be offered for sale or supplied at the said bargain price amounts to an unfair trade practice. When a seller advertises a product for the sale at a discount price of 35%/40% or a discount upto 35%/40% but charges VAT extra on the discounted price, he obviously does not intend to offer the goods at the bargain price advertised by him. If the seller despite advertising discount upto 35%/40% intends to charge VAT extra which he does not charge on the sale of an undiscounted product, it is nothing but an unfair trade practice, the object behind which is to lure the customer to his store by advertising a discount which the seller actually does not intend to give to the purchaser. 

Once the customer reaches the store, he has no option except either to buy the product at a discount less than the discounts promised to him or to come back without any purchase despite having visited the store at considerable cost and inconvenience. If the customer or atleast some of them buy the product at lesser discount, instead of returning back empty handed, which is likely to be situation in most of the cases, the purpose of advertiser is well served as he is successful in obtaining pecuniary advantages on the basis of a misleading advertisement. Such an act would certainly constitute an unfair trade practice within the meaning of the Consumer Protection Act. Such an advertisement is a misleading advertisement since the seller does not intend to extend the whole of the discount promised by him to the purchaser. There is no merit in the revision petition, which is accordingly dismissed.