Chanakya Sharma, Student of Ram Manohar Lohiya National Law University (RMLNLU) challenged the illegal levy of Merchant Discount Rates (MDR) on debit card transactions.
In a restaurant in Goa he was charged extra 2% surcharge on the bill and on questioning the same both the restaurant and bank did not resolve his query. He later came to know that the restaurant has charged the same extra 2% surcharge on the previous bill as well. So, for redressal of this unfair charge by the restaurant he filed a Consumer Complaint before the District Consumer Dispute Redressal Commission in South Goa.
The complaint filed by him primarily focused on the MDR. MDR is the commission paid to the bank for every transaction by the merchant. He argued that the burden of paying the MDR cannot be shifted on the consumers as it has to be paid by the merchant to the bank.
He further argued that the Reserve Bank of India in its circular published in 2013 specifically stated that the levying fees on customers for debit card payments is not justifiable and is also not permissible by the agreement between bank and the merchant.
The District Consumer Forum after hearing all the arguments and looking the bill passed an order in favour of Chanakya and observed that the restaurant is guilty of charging extra 2% surcharge. The forum further stated that the duty to pay MDR was that of the merchant as per the agreement between merchant and bank and charging of same from the consumer falls under the unfair trade practice and hence, the restaurant is liable to compensate the consumer.
The forum further noted in its order that the restaurant was evading tax liability as the invoice issued by the restaurant proved that he was not levying VAT on the bill and that he was using two accounts, one was used to levy tax on goods sold and the from the other tax was not levied, thus , it is crystal clear that restaurant was evading tax liability.
The Form ordered the restaurant to pay Rs. 15,000 as compensation to Chanakya and to further pay a sum of Rs.10,000 towards consumer welfare fund.
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