Karnataka HC Upholds State's Decision on Service Charges for App-Based Auto Rickshaw Rides

Karnataka HC Upholds State's Decision on Service Charges for App-Based Auto Rickshaw Rides

The Karnataka High Court on Monday rejected writ petitions contesting a state government notification that sets the service charge collected by app-based cab aggregators for auto-rickshaw rides.

Justice Suraj Govindaraj clarified that, according to the notification, the aggregators are entitled to collect a 5% service charge.

"The writ petitions stand dismissed. It is, however, made clear that the aggregators would be entitled to collect 5% service charges as per the impugned notification now upheld over and above the fare fixed," the Court ordered.

On November 25, 2022, the Karnataka transport department capped service charges for app-based auto-rickshaw bookings at 5% of the base fare, plus applicable GST.
 
This move was challenged by Uber, Ola, and Rapido before the High Court. They cited the Motor Vehicle Aggregator Guidelines, which permit them to charge a commission of 20% along with a surge price of up to double the base fare.
 
They also sought to quash the notification, arguing that it was illegal, arbitrary, and irrational. In January 2023, the Court had stayed the notification, allowing the aggregators to operate temporarily while charging a 10% convenience fee.
 

Justice CM Poonacha observed that the State government, while issuing the notification, was required to consider the Motor Vehicle Aggregator Guidelines, which cover the entire spectrum of transport aggregator operations, rather than solely relying on the Motor Vehicles Act.

The Court eventually dismissed the petitions on Monday.

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