MRTPC raps Tata Motors

The Monopolies and Restrictive Trade Practice Commission (MRTPC) has held Tata Motors guilty of adopting unfair methods to sell Tata Indica.

While issuing a 'cease and desist order' to the company, a division bench of MRTPC chairman Justice BK Rathi and member MMK Sardana said that the charging of the entire showroom price as booking amount including the sales tax, excise duty etc from applicants, was unjustified and "definitely prejudicial" to the interests of the customers.

Tata Motors has mopped up Rs 3216.45 crore by undertaking bookings for the cars, before the commencing of its production, in 1999.

"The sales tax should be transferred to the government accounts immediately as and when it is realised," the commission observed.

When contacted, Tata Motors spokesperson said that the company has received the MRTPC order and would take appropriate steps.

According to the complaint filed by three desirous applicants, Tata Motors had issued an advertisement for booking of its Indica cars from January 17 to January 23, 1999, according to which the entire showroom price was to be deposited at the time of booking.

The company through its 50 dealer outlets all over the country had booked 1,13,768 cars against the proposed delivery of 60,000 cars , thus collecting Rs 3216.45 crore, they stated.

According to them, the company had no right to charge the entire price along with excise duty, sales tax and transportation charges prior to commencing of the production of the cars.

Tata Motors was unjustified in realising the amount prematurely and should not have been benefited from such advances as the excise duty and sales tax were levies that accrue to the government.

According to the director (research), who investigated the matter, said the company's intention was to deliver only 10,000 cars in the first instance and the booking order was silent on two points - the precise delivery dates and the quantum of vehicles to be actually delivered during the first year.

Tata Motors, however, said that it didn't anticipate the overwhelming response for its cars in view of other indigenous manufacturers.

Besides, its sole purpose of collecting the total price including the excise duty and sales tax was to discourage speculative buyers and get the accurate assessment of the genuine demand for Indica cars.

While alleging that none of the three complainants had any locus standii to file complaints as they were not its consumers, the company said that the desirous applicants were fully aware of the booking conditions and anyone opting for the scheme were to receive interest at 11 per cent per annum on the booking amount till the date of delivery.