GST: Despite inspection by govt teams retailers continues to charge tax on MRP

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On July 10, reported, citing a LocalCircles survey, that over 51 per cent consumers complained about illegal levy of the Goods and Services Tax by retailers over and above the maximum retail price (MRP).

Sources have now told that following the report, the Department of Consumer Affairs of the Union government sent its teams for inspection at various places across the country to check if the retailers were actually charging GST over and above the MRP. The government teams found the complaints to be true, the sources said.

In most cases, the government teams warned the retailers against indulging in fraudulent practice by charging GST illegally. However, it is not yet clear, if the inspection teams penalised any of the retailers for illegally charging GST from consumers.


The inspections were carried out by officials of the Legal Metrology Division of the Consumer Affairs Ministry in association with the State Legal Metrology in respective states. The Legal Metrology Division deals with regulation of trade in packaged commodities.

Following the inspection, the retailers, where government teams visited, corrected their billing system and issued corrected bills. However, in some cases, the new bills had increased MRP.

In some other cases, the retailers still apprehensive of the GST impact on their business, have reportedly adopted other tactics to charge GST. One particular practice, as reported by consumers on the social engagement platform LocalCircles, is that the retailers are charging GST after offering discount on the MRP.

In one case, a consumer shared two bills dated July 3 and July 25 respectively. In both bills, a popular food joint in Noida charged GST from consumers. However, in the second bill, the MRP of the same product is billed at a discounted price and after GST, its price is totaled at the previous MRP of Rs 40.


According to the Consumer Goods (Mandatory Printing of Cost of Production and Maximum Retail Price) Act 2006, maximum retail price (MRP) of a product is the rate above which it cannot be sold. All the tax components are included in the MRP.

The Consumer Affairs Department has repeatedly said in its awareness campaigns that the MRP covers 10-35 per cent margin of profit.

Under the Monopolies and Restrictive Trade Practices Act (MRTP Act), the Essential Commodities Acts and the Consumer Protection Act, selling a product over and above MRP is a punishable offence.

Under the GST Act, selling a product over and above MRP is a violation of the anti-profiteering clauses of the GST Act. Fraudulent retailers registration may be cancelled.

In February this year, the National Consumer Disputes Redressal Commission (NCDRC) ruled that charging tax on a discounted price (MRP) amounted to unfair trade practice. The NCDRC ruling has not been challenged implying that charging GST on MRP is illegal.


In a fresh survey by the LocalCircles, which has an official arrangement with the Consumer Affairs department for addressing citizens’ grievances, only 30 per cent consumers said that they were not charged GST over and above MRP.

About 30 per cent said that they had been illegally charged GST several times while another 20 per cent recalled having been unfairly taxed a few times. About 20 per cent participants said that they did not notice if they were charged illegally.

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