In a significant development, Hon’ble Delhi High Court has upheld the central government’s decision to impose Goods and Services Tax (GST) on autorickshaw rides booked through ride-sharing applications like Uber and Ola. This ruling comes as a setback for these app-based cab aggregators who were contesting the decision.
Court’s Verdict: No Violation of Fundamental Rights
The division bench, comprising Justices Manmohan and Manmeet Pritam Singh Arora, stated that the decision to levy GST on autorickshaw rides booked through apps did not violate any fundamental rights. They further explained that the classification of service providers as a separate and distinct class is recognized in the provisions of the GST Act. Moreover, this classification has a rational nexus with the object sought to be achieved.
Uber’s Petition Dismissed: No Discrimination in Notifications
The High Court dismissed Uber India’s petition challenging the levy of GST on autorickshaw rides booked via their platform. The bench held that the notifications under challenge did not result in discrimination, as the classification of e-commerce operators is recognized by the statute.
Uber India had challenged the November 2021 notifications, arguing that increasing the prices for autorickshaw rides on the app would have a significant impact on the market. The company also contended that the notification was discriminatory, as the central government had no plans to charge GST on autorickshaw rides booked through offline methods. They claimed that there should not be any distinction in tax treatment between passenger transport services provided by auto drivers facilitated through mobile platforms and those provided by auto drivers offline.
The Court Rejects the Argument of Unreasonable Classification
According to the petition filed by Uber, the government’s directives failed to satisfy the test of reasonable classification. They argued that no differentiation in tax treatment should be created between passenger transport services rendered by auto drivers facilitated through mobile platforms versus those provided by auto drivers offline.
However, the court rejected this argument and upheld the central government’s decision to impose GST on app-based autorickshaw rides.
Conclusion: Implications for the Ride-Sharing Industry and Commuters
The Delhi High Court’s decision to uphold the imposition of GST on app-based autorickshaw rides is bound to have far-reaching implications for both the ride-sharing industry and commuters. For app-based cab aggregators like Uber and Ola, this ruling signifies the need to adapt to new regulatory frameworks and tax policies. They may need to reevaluate their pricing strategies and consider the additional costs associated with GST on autorickshaw rides