The Karnataka High Court has directed the Central Board of Indirect Taxes and Customs (CBIC) to clarify whether passenger transportation services offered through Uber’s subscription-based model attract Goods and Services Tax (GST) under Section 9(5) of the Central Goods and Services Tax (CGST) Act, 2017. The Court has also instructed the CBIC to place the issue before the Goods and Services Tax (GST) Council, if necessary, and to file a status report on the steps taken.
The direction was issued by a bench headed by Justice S.R. Krishna Kumar while hearing a writ petition filed by Uber India Systems Pvt. Ltd., an electronic commerce operator (ECO), concerning the applicability of the reverse charge mechanism under Section 9(5) to its revised business model.
Section 9(5) of the CGST Act is a special provision under the reverse charge mechanism, under which the liability to pay GST is shifted from the actual service provider to the electronic commerce operator for certain notified services supplied through its platform. Passenger transportation services provided through electronic platforms such as Uber have been notified under this provision, making the ECO liable to discharge GST on the fare earned by drivers.
Traditionally, Uber and similar ride-hailing companies operated on a commission-based model. Under this arrangement, drivers paid a per-ride commission to the platform for facilitating bookings through the mobile application. GST at the rate of 18% was paid on this commission income. Additionally, Uber discharged GST at 5% on passenger transportation services under Section 9(5), as the services were considered to be supplied through the electronic platform.
In recent years, however, several companies in the sector transitioned to a “subscription” model. Under this model, drivers pay a fixed subscription fee to access the platform, instead of paying a commission for each ride. Based on this change, companies adopted the view that passenger transportation services were no longer being supplied “through” the electronic commerce operator, which is a key condition for invoking Section 9(5). Consequently, it was contended that GST liability under Section 9(5) would not arise in the subscription model.
The issue reached the Authority for Advance Ruling (AAR) in Karnataka, where multiple applicants sought clarity on the applicability of Section 9(5) to the subscription model. In earlier rulings, the AAR held that passenger transportation services under the subscription model were not provided through the electronic commerce operator, and therefore Section 9(5) did not apply.
Uber India also sought an advance ruling on the same issue after introducing its subscription-based model. However, in a departure from its earlier decisions, the Karnataka AAR ruled against Uber, holding that Section 9(5) was applicable even under the subscription model. This ruling was rendered without reconciling or distinguishing the previous contrary rulings issued by the same authority, leading to uncertainty and lack of uniformity.
Aggrieved by the inconsistent approach, Uber India made multiple representations to the CBIC, requesting it to issue a clarification under Section 168 of the CGST Act to ensure uniformity in the implementation of the law. As no decision was taken on these representations, Uber approached the Karnataka High Court by way of a writ petition, seeking a direction to the CBIC to decide the matter and issue appropriate clarifications.
By an interim order dated 25 September 2024, the High Court directed the CBIC to hear all relevant stakeholders and issue necessary directions on the issue. However, instead of issuing any clarification, the CBIC referred the matter to the GST Council.
The Court expressed its displeasure over the continued non-compliance with its interim directions, noting that despite repeated orders and undertakings given to the Court, the CBIC had not acted as directed. The bench repeatedly questioned the revenue authorities on their failure to comply with the Court’s mandate.
The High Court has now directed the CBIC to comply with the interim directions at the earliest and submit a detailed status report on the next date of hearing. The Court has further directed that the CBIC should make efforts to ensure that the issue is placed as an agenda item before the GST Council, if a meeting is convened prior to the next hearing.
The matter has been listed for further hearing on 30 January 2026.
Case Details
Case Title: Uber India Systems Private Limited Versus Authority For Advance Ruling
Case No.: WP 25294/2024
Date: 11/12/2025
Counsel For Petitioner: Achal Anand V J
