Petition challenging cap on service charge for app-based autos, cabs dismissed

High Court of Karnataka dismisses petitions challenging State government's 5% service charge cap on transport aggregators, including Uber and OLA.

The High Court of Karnataka on Monday dismissed the petitions questioning the legality of the State government’s notification issued in November 2022, imposing a cap on the service charge/commission to be collected by the mobile app-based transport aggregators to only 5%, plus applicable GST, on the base fare fixed by the government for autorickshaws.

Justice Suraj Govindaraj passed the order while dismissing the petitions filed by Uber India Systems Pvt. Ltd., which operates Uber taxi services, and ANI Technologies Pvt/ Ltd., which operates Ola taxis. A copy of the full judgement has yet to be released.

With Monday’s order, the interim order passed by the High Court on January 4, 2023, staying the November 25, 2022, notification of capping the service charges, stood vacated, thus restraining the app-based transport aggregators from collecting service charges beyond 5% plus applicable GST on the government-fixed fares for offering autorickshaw services through their apps.

The petitioners contended that capping service charges was contrary to the law and sought direction to the State government to prescribe fares for autorickshaws on aggregator platforms in the State of Karnataka after properly considering and qualitatively assessing the relevant factors and, more importantly, adhering to the Motor Vehicles Aggregator Guidelines (MVAG)-2020, which was framed by the central government.

The petitioner-aggregators had also sought a direction from the court to permit them to charge a commission/service charge of 20% along with a surge price of up to 2 times the base fare/rate applicable on autorickshaws plying through their app-based platform in terms of the MVAG-2020.