The Delhi High Court Has Upheld GST Notifications For Ola And Uber Bookings Of Auto Rickshaws
On April 12, 2023, the Delhi High Court upheld government notifications imposing the Goods and Services Tax (GST) on auto-rickshaws booked through app-based aggregators such as Uber and Ola. The court held that the notifications did not result in discrimination, as the classification of e-commerce operators was recognized by the statute, and the classification had a rational nexus with the object sought to be achieved.
The court was dealing with a plea filed by Uber India challenging the notifications issued by the Central government in November 2021. According to the notifications, if an auto-driver registers with an app-based aggregator and provides transportation services to passengers identified through such platforms, GST at 5% or 12% will become applicable on the fare collected.
Uber argued that 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. It contended that the government's directives failed to satisfy the test of reasonable classification, and no differentiation in tax treatment could be created between passenger transport services rendered by auto drivers facilitated through mobile platforms and those rendered by auto drivers offline.
However, the court rejected Uber's argument and upheld the government's notifications, stating that they did not violate fundamental rights. The court reasoned that the classification of e-commerce operators was recognized in the provisions of the Act, and it had a rational nexus with the object sought to be achieved.
In conclusion, the Delhi High Court has upheld the government's notifications imposing GST on auto-rickshaws booked through app-based aggregators, dismissing Uber India's plea that the notifications were in violation of Article 14 of the Constitution. The court's decision is likely to have a significant impact on the taxation of app-based transportation services in India.
