NEW DELHI: In a major setback for ride-sharing applications such as Uber and Ola, the Delhi High Court on Wednesday upheld the decision of the Central government to levy GST charges on auto rickshaw rides that are booked through ride-sharing applications by commuters. The court was of the view that the notification did not violate any fundamental rights because the classification of e-commerce operators is recognised by the statute.
“Classification as a class of service providers separate and distinct is recognised in the provisions of the Act. The classification has a rational nexus with the object sought to be achieved,” a division bench of Justices Manmohan and Manmeet Pritam Singh Arora averred. The court was hearing a petition filed by Uber India challenging the notifications issued by the Central government in November 2021.
Following these notifications, if an auto-driver registers itself with an app-based aggregator and provides transportation of passenger services to passengers identified through such platforms, GST at 5 per cent or 12 per cent will become applicable on the fare collected, it was argued.
According to Uber’s version, the government was not planning to impose any such tax on auto rides through offline modes like street hailing, and, therefore, the notifications were in violation of Article 14 of the Constitution.
The government’s directives fail to satisfy the test of reasonable classification and no differentiation in tax treatment can be created between passenger transport services rendered by auto drivers facilitated through mobile platforms versus passenger transport services rendered by auto drivers offline, it was stated.