The Delhi High Court upheld the government’s decision to levy GST on auto rickshaw rides booked through cab aggregator platforms. The decision was a setback for ride-hailing giants Uber and Ola, who had challenged the GST levy on their services.
A division bench comprised of Justices Manmohan and Manmeet Pritam Singh Arora ruled on Wednesday (April 12) that the decision to levy GST did not violate fundamental rights. The bench also stated that classifying app-based cab aggregators as a separate class of service providers was rational and in accordance with the provisions of the GST Act.
The court denied Uber’s petition to challenge the GST levy. It claimed that the challenged notifications did not result in discrimination because the classification of e-commerce operators was recognised by the statute.
Uber India had contested the November 2021 notifications, claiming that raising the prices of auto rickshaw rides on the app would have a significant impact on the market.
Uber also claimed that the notification was discriminatory because the Centre had no plans to impose GST on auto rickshaw rides booked offline and local auto ride prices remained low.
According to Uber, the government’s directives failed the reasonable classification test. It stated that there could be no distinction in tax treatment between passenger transportation services provided by app-based auto drivers and those provided by offline drivers.
The move comes as government scrutiny of auto rickshaw aggregators such as Uber, Ola, and Rapido has increased. Many state governments have also moved to tax auto-rickshaw aggregators in the same manner as traditional offline autos.
For example, in November 2022, the Karnataka government directed regional transport authorities to levy convenience fees and GST on auto rides booked through ride-hailing apps. Furthermore, many states have questioned the disparity between the fare app aggregators levy and the government-notified fare.
