Karnataka HC Upholds Govt. Notification, Caps Service Fee on App-Based Auto Rides at 5%

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

Justice Suraj Govindaraj dismissed petitions from app-based aggregators challenging the government notification, asserting that the platforms are entitled to collect a 5% service charge in addition to the fixed base fare.

Transport Minister R Ramalinga Reddy hailed the judgment, stating that it would benefit thousands of Bengaluru citizens who rely on autos for daily commuting. He emphasized that the ruling would ensure the smooth operation of app-based auto rides and confirmed that the department officials have been instructed to file a caveat in the high court to safeguard the public interest.

The state transport department issued a notification on November 25, 2022, imposing a 5% cap on service charges levied by ride-hailing platforms on autorickshaw users. However, users are also required to pay GST at applicable rates when hailing auto services through apps.

App-based ride-hailing platforms such as Uber, Ola, and Rapido had challenged the notification, arguing that the Motor Vehicle Aggregator rules permitted them to charge a 20% commission along with surge pricing during peak hours. Despite this, the transport department maintained that the licenses issued to petitioners were limited to motor cab rides, not auto rickshaws.

The judgment marks a significant development in the ongoing dispute between the transport department and aggregators regarding service fees for auto rickshaw rides. It provides clarity on the permissible service charges, ensuring a fair and regulated environment for both users and operators in the auto-rickshaw segment.

Disclaimer: This information is covered based on the latest research and development available. However, it may not fully reflect all current aspects of the subject matter.

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