Karnataka Vs Uber, Ola: HC Issues Notice To Govt Over 5% Convenience Fee Cap

The public fallout between the Karnataka government and ride-hailing apps appears to have taken a new turn. 

In response to a clutch of petitions filed by ride-hailing apps against the 5% cap on convenience fee for auto rides, the Karnataka High Court has reportedly issued a notice to the state government. 

The case will likely come up for a hearing on December 12th. The notice was issued by a single-judge bench of Justice CM Poonacha on pleas filed by cab aggregators Uber and Ola. 

This comes amidst a flurry of developments in the case. On November 25, the State Transport Department notified an official order that capped the convenience fee for auto rides at 5%, exclusive of GST. This means that the end customer will have to pay an additional 5% GST, besides the service charge. 

The move hit the auto aggregators the hardest, as the rates set by authorities were half of the prevailing interim 10% service charge set by the High Court.

At the centre of the debate is an order passed by the state Transport Department in October that barred cab aggregators namely Uber, Ola and Rapido, from offering auto rickshaw services in the state for overcharging customers.

The aftermath saw ride-hailing apps drag the state government to Court. In subsequent relief, the HC allowed the aggregators to resume services and capped the convenience fee at 10%, besides 5% GST.

The cab aggregators have, time and again, highlighted that the 10% service charge cap could render it financially unviable. Uber went on to say that the move could force it to limit auto services to select parts of Bengaluru.

At Odds With Govt

Another major issue plaguing the cab aggregators seems to be the November 2020 aggregator guidelines issued by the Road Transport Ministry which, as per Ola and Uber, allows the two players to offer auto rickshaw rides in the state. 

The state authorities, however, have contended that the ride-hailing apps were only allowed to operate four-wheeler taxis under the Karnataka On-Demand Transportation Technology Aggregators Rules.

Amidst the ongoing tussle, the state transport authority on November 6 refused to renew the licence of Uber and Ola and asked the ride-hailing platforms to comply with the government’s directions before renewing their licences.

In a fresh salvo, the authority gave Uber and Ola 45 and 30 days to comply with all norms, respectively. The norms include the installation of GPS, printing-enabled digital metres, panic buttons, among others. 

This adds to a plethora of problems faced by these players. While Ola and Uber have been under fire for exorbitant pricing, these firms have also been under the lens of the Competition Commission of India (CCI) for alleged unfair business practices.