[Zappo]

Originally Posted by RX135

The link says that they charged for sales and excise duties in it. It clearly says,
"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."
And if they were not sure about cost, why charge everything? Even token amount of 1L or 2L Rs was good enough to shoe away speculative buyers. I think, they just took a decision(not a fraud though) to take advantage of market.

Very true... they did just that. They picked up some cheap funds. Remember when they borrow from the industrial lenders they do not get it at the rates at which we, the retail lenders, get to park our money with the FIs. However thats about it. They paid the then prevailing ratail rate of interest for the fund which was 11% at the time. This was a deposit to gain a privilege for a future transaction.

Beyond this, anything like they charged for the sales tax and other levies is plain extrapolation of the facts. Did they give the customer a cash memo for the sale of a car which showed the break-up of the cash costs, the tax components etc. I can say emphatically, No they would not have. The potential customers would have simply got a deposit receipt for the amount. It was towards a future transaction (buying the car). So where is question of cheating? Everyone knew what they were doing.

The law only says that once a transaction happens (the sale of the car) and the customer pays for all the tax components it needs to be paid to the government within a stipulated timeframe. And a deposit is a deposit at a certain rate. Thats about it... there is no tax-shax or levy-shevy kaa question in a deposit. In my opinion Tatas do have a very firm defence.

[RX135]

Zappobhai, they may not have given breakup of what they are charging for, but then how does it explain adding up sales tax/excise duty in that so called "deposit". Clearly, they charged for it, even before they sold the car. And that is definitely objectionable. If Tatas go on saying that, they didn't know actual cost of car and hence, didn't know that the deposit amount also "happened" to include sales-tax/excise duty, I would call it real lame excuse.

[Zappo]

Originally Posted by RX135

Zappobhai, they may not have given breakup of what they are charging for, but then how does it explain adding up sales tax/excise duty in that so called "deposit". Clearly, they charged for it, even before they sold the car. And that is definitely objectionable. If Tatas go on saying that, they didn't know actual cost of car and hence, didn't know that the deposit amount also "happened" to include sales-tax/excise duty, I would call it real lame excuse.

hee hee heee... of course that will sound a bit lame. But as I said it is possible at the beginning stages that they may not have had an exact fix on all the break-ups. They of course knew the roundabout lumpsum that the car will cost. And yes, they did indulge in opportunism. I will agree to all that. What I am only saying is that the case as it is being made out is not exactly that way.

By the way, the case is actually not the way we are perceiving it to be. You see, the case is not of cheating the customer. Apparently it is that of the government being cheated. According to them the Tatas recovered those levies at the time of the booking but did not deposit that with the government!!! And that is where they are wrong. The mere fact that the Tatas had the money does not make it into a recovered levy. Till the actual transaction is not complete and they (Tatas) do not issue a cash memo for having sold the car why and how should the deposit money be categorized as government levy? Suppose a customer decided to cancel the booking how can that prepaid levy be recovered from the government?

[abhi182]

Very true... they did just that. They picked up some cheap funds. Remember when they borrow from the industrial lenders they do not get it at the rates at which we, the retail lenders, get to park our money with the FIs. However thats about it. They paid the then prevailing ratail rate of interest for the fund which was 11% at the time. This was a deposit to gain a privilege for a future transaction.

WTH, 11% is cheap debt for Tata Motors?
These guys (Read Tata Motors and other blue chip cos) pick up debt at much favorable interest rates than 11%..
IMHO, ther's nothing unethical about the whole episode, and also, no one was forcing any customer to pick up an Indiaca as soon as it comes out

[himanshugoswami]

Originally Posted by Zappo

By the way Himanshu I have a doubt there... Is the MRTPC order not challengeable?
[/indent]

Yes it is challengable.

But under law, once the trial court passes an order against you, you are convicted of the offence. In appeal, you may or may not get the order set aside. But hte fact is that Tatas have been held guilty of wrong doing under the MRTP act.

Moreover, collecting levies and duties prior to sale is an economic offence as well and after this ruling, I wont be surprised if the Economic offences wing also moves in against Tata Motors.

lets wait and watch!