1. THIS is an appeal against the Order dated the 21st October, 1991 of the State Commission of Tamil Nadu at Madras.
2. THE appellant, the Annamalai Finance Ltd., is a Lease Financing Company. It gives loans for purchase inter alia of consumable durables like T.V. sets etc. The product which a consumer wishes to acquire is purchased by the Company and leased out to a lessee who is required to pay the lease amount as per the lease agreement every month. On the expiry of the lease, the article or the product concerned is sold to the lessee or his nominee at the depreciated value.
On the goods or articles purchased for the purpose of leasing, the leasing company also col¬lects sales-tax from the lessee. In addition, it also collects a certain amount from the lessee for insuring the goods or articles leased out.
3. THE District Forum found that the appellant leasing company had collected Rs. 29,80,000/- by way of sales-tax which includes a sum of Rs. 8,51,476-38p by way of sales tax on purchase and leasing of commercial vehicles. It is also said to have collected a sum of Rs. 9,00,000/- as insur¬ance premia.
4. THE amounts collected as sales tax are ordi¬narily required to be deposited with the Sales Tax Authorities. But the question, whether the sales-tax is leviable on the lease rentals of leased goods is said to be pending adjudication in the High Court of Tamil Nadu at Madras and, therefore, the appellant did not deposit with the sales-tax au¬thorities the amounts collected as sales tax from the lessees.
As regards the amount collected by way of insurance premia, according to the Order of the State Commission, the appellant never insured the T.V. sets, but, still retained the amount of the premia so collected.
5. IN the public interest complaint filed by the respondent Consumer Protection Council, Ma¬dras, it has been alleged that no insurance policy has been taken out, yet the insurance premia has been collected and retained by the appellant, that the sales-tax collected as contingent deposit was payable to State Government and had been re¬tained by the appellant and thus misappropriated and utilised for the purpose of business of the appellant on the plea that the question of liability of lease rentals to sales-tax was pending adjudica¬tion by the High Court, Madras. According to the respondent this amounted to gross deficiency of service and also unfair trade practice.
6. DURING the pendency of the case before the State Commission, the parties came to a settle¬ment, whereby the appellant agreed that the total amount of sales-tax excluding that on commercial vehicles collected from the lessees viz. Rs. 22,25,152/ - be kept in a separate account in a Nationalised Bank (pending the Order of the High Court). The appellant also agreed to refund to the lessees a sum of Rs. 1,74,097/- collected by way of insurance premia. In the light of this settlement, the appeal before the State Commission could have been dismissed.
The State Commission, however, observed that by not depositing the sales-tax contingency deposits in a Bank in a separate account, the appellant company "has been utilising the whole amount for the purpose of its business, and must have thereby gained enormous profit. The con¬sumers are damnified to that extent and this amounts to serious deficiency of service. The financer must therefore, disgorge the benefits, enjoyed thereby, by way of payment of interest on these amounts from the date of collection at 12 per cent per annum." Again the State Commission held that by collecting the amounts by way of insurance pre¬mia and not taking out insurance policies for the goods leased, the appellant has committed "gross deficiency of service and deplorable unfair trade practice." In regard to the sales-tax deposit, the State Commission ordered that the amount of Rs. 30,76,632/-, be deposited with the State Bank of India along with interest at 12 per cent per annum on the amount collected as sales-tax from the date of their collection, and be disbursed of in the light of the order of the High Court.
7. THE Order of the State Commission has been challenged in this appeal by the appellant on the following grounds:
1. The amounts collected as sales-tax are creditable to the Consolidated Fund of the State and do not constitute payment of consideration for any specific service. 2. Secondly, that the Order of the State Commission is without jurisdiction.
8. AS regards the amounts collected as insur¬ance premia the appellant company had decided, on certain practical considerations, to stop collec¬tion of the premia after 1.3.1988; the policies taken earlier were surrendered, though the amount so collected earlier either as premia or as surrender value had not been refunded to the lessees. The appellant had agreed to refund a sum of Rs. 1,74,097/- so collected.
Considering, therefore, the amounts in¬volved viz. over Rs. 30 lacs as sales-tax contingent deposit and Rs. 1,74,000/- as insurance premia, according to the appellant, the dispute was beyond pecuniary jurisdiction of the State Commission.
9. THE challenge of the appellant to the Order of the State Commission is well founded. It was beyond the pecuniary jurisdiction of the State Commission to entertain and deal with the com¬plaint petition when the value of the subject matter clearly exceeded Rupees Ten Lakhs. Besides, so far as sales-tax is concerned its wrongful collec¬tion and subsequent retention by the appellant instead of depositing the amount with the State Government does not, by any stretch of imagina¬tion, constitute deficiency in service to a con¬sumer. On both these grounds the challenge to the Order of the State Commission succeeds and the Order is set aside. The adverse comments made against the appellant company in the Order of the State Commission are hereby vacated.
10. THE Consumer Forums have also no power under Sec. 14 of the Consumer Protection Act, 1986 to give any directions viz. that the appellant should deposit the amount collected by way of sales-tax contingency deposit with a Bank and pay interest from the date of the amounts so collected as sales-tax cannot be considered as a charge for supply of goods or rendering of service.
This Commission cannot also help ob¬serving that, after the parties had come to a settle¬ment in this case, it was not proper for the State Commission to have gone on with this case and passed the impugned order. The Order of the State Commission has to be set aside on the ground of lack of jurisdiction and illegal exercise of jurisdic¬tion by the State Commission.
