Karnataka HC Upholds Government's Cap on Service Fee for App-Based Auto Rides at 5%: Report

On Monday, a writ petition that challenged a notification of the Karnataka state government fixing the service charge that's collected by app-based cab aggregators was dismissed by the Karnataka High Court, as per a report by Bar and Bench. 

The state government's order stating that aggregators would be entitled to collect a service charge of 5 per cent was upheld by the court. 

In an order, the court said, “The writ petitions stand dismissed. It is, however, made clear that the aggregators would be entitled to collect 5 per cent service charges as per the impugned notification now upheld over and above the fare fixed.” 

Read: Bengaluru Airport Cab Rides to Become Costlier with Increased Pickup Fees: Report

Service charges for app-based auto drivers were capped at 5 per cent (plus GST that's applicable on the base fare) by the Karnataka Transport Department on November 25, 2022. 

However, ride-hailing apps such as Uber, Ola, and Rapido challenged this move. Citing the Motor Vehicle Aggregator Guidelines, the companies said that they should be permitted to charge a common rate of 20 percent. Along with the 20 percent, a surge price that can be up to double the base fare can also be charged. The companies also referred to the notification as illegal, arbitrary, and irrational and sought that it be quashed. 

The notice was stayed by the court in January 2023, allowing the aggregators to continue operating for a short period of time in exchange for a 10 percent convenience charge. On Monday, the court finally dismissed the applications. While highlighting that this judgment will benefit thousands of citizens of Bengaluru, Transport Minister R. Ramalinga Reddy said, as per the Economic Times, “I have also asked my department officials to file a caveat in the high court to uphold public interest.”