Karnataka HC upholds govt notification, caps service fee on app-based auto rides at 5% – ET Auto

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App-based ride-hailing platforms Uber, Ola and Rapido challenged the notification arguing that the Motor Vehicle Aggregator rules allowed them to charge a 20% commission along with a surge price during peak hours.

The Karnataka High Court on Monday upheld the state government’s order capping the service charge levied by ride-hailing platforms on users of auto rickshaws in Bengaluru at 5% of the base fare.

Justice Suraj Govindaraj, while dismissing the petitions from the app-based aggregators challenging the government notification, said the platforms were entitled to collect a 5% service charge over and above the base fare fixed.

Transport minister R Ramalinga Reddy said the judgement would benefit thousands of citizens of Bengaluru who rely on autos for their daily commute. The judgement, he added, would facilitate smooth operation of app-based auto rides.

“I have also asked my department officials to file a caveat in the high court to uphold public interest,” the minister told ET.

Filing of a caveat would ensure that the court would not pass any order without hearing the government if the aggregators challenge the single-judge bench’s judgement before a division bench.

The state transport department had, on November 25, 2022, issued a notification capping the service charges at 5% on the base fare.

Those hailing auto services using apps also must pay GST at the applicable rates. GST and service charges don’t apply to autos hired outside of apps.

App-based ride-hailing platforms Uber, Ola and Rapido challenged the notification arguing that the Motor Vehicle Aggregator rules allowed them to charge a 20% commission along with a surge price during peak hours.

The transport department and aggregators had been on a divergent path about how much service fee to collect from users of auto rickshaws. Uber and Ola had argued that aggregator guidelines in November 2020 covered auto rickshaws as well. The guidelines were issued pursuant to an amendment to the Motor Vehicles Act, 1988, the previous year.

The state transport department had all along maintained that the licences issued to petitioners under the Karnataka On-Demand Transportation Technology Aggregators Rules, 2016, limited their scope of operation to only motor-cab rides.

In January 2023, Justice CM Poonacha at the Karnataka High Court stayed the November 25 notification on the grounds that the government should have taken into consideration the aggregator guidelines the government issued in 2020. The transport department instead went by Section 67 of the MV Act, the court said, while allowing petitioners to collect a convenience fee of 10% of the base fare till further orders.

  • Published On May 28, 2024 at 10:17 AM IST

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