Tags:
Journalism of Courage
In September 2014, a year after it rolled into Bengaluru to signal the start of its cab-hailing service in India, Uber was served a service tax notice in Mumbai. This led to a huddle of Uber top executives. A PowerPoint presentation attached to an email dated November 25, 2014, made it clear that “Authorities want Uber to open their books, otherwise, we are facilitating fraud. They have summoned RG (Ryan Graves, then Senior Vice President, Global Operations at Uber) & TK (then CEO Travis Kalanick). Penalties and warrants for arrest are next.” This email was sent by Axel Martinez, VP and Treasurer of Uber, to the company’s top executives.
This PowerPoint forms part of The Uber Files, obtained by The Guardian and shared with the International Consortium of Investigative Journalists with which The Indian Express has partnered for this investigation.
It stated: “Negotiate with tax authority the ability to collect and remit payments on behalf of our drivers, while limiting our liability.” And mentioned the “downsides” of “collecting and remitting” service tax: “Liability shifts towards Uber; will require frequent audit from tax authorities; will have to pay historical taxes due; under the wrong model, Uber could be liable for ST from services provided by drivers outside of Uber platform.”
On February 28, 2015, in the Union Budget speech, then Union Finance Minister Arun Jaitley announced the liability of aggregators to pay service tax. And on April 22, 2015, Uber said, “Our fare structure has been revised to cover service tax applicable.”
Currently operating in over 100 Indian cities via five Indian subsidiaries — holding companies of four are based in the Netherlands — Uber has had several run-ins with authorities and regulators, and has been grappling with court cases and default notices.
On May 17 this year, the Central Consumer Protection Authority (CCPA) issued notice to Uber for alleged violation of consumer rights; there is a demand from the intelligence wing of the GST department for Rs 827 crore outstanding service tax (up to June 2017) which the company has challenged in the Bombay High Court; and, there is a Public Interest Litigation pending before the Supreme Court.
The CCPA, established in 2020 to promote, protect and enforce the rights of consumers, has served notice to Uber, citing several deficiencies such as not providing a customer care number, not giving details of the grievance officer, charging different fares on the same route, and unreasonable levy of cancellation charges.
Nidhi Khare, Additional Secretary in the Department of Consumer Affairs and Chairperson of the CCPA, told The Indian Express that the “CCPA analysed 770 complaints received against Uber on the consumer complaint helpline in one year, between April 2021 and May 2022, and among them, 473 were for ‘deficiency in services’ only.” “We have got their reply. It is being examined. Further action is in process,” Khare said.
There is a PIL in the Supreme Court and its outcome could impact Uber businesses. It seeks declaration of app workers — along with those of other cab aggregators — as “workers” under applicable social security laws and extension of benefits, and all gig workers as “unorganised workers” and/or “wage workers.”
The PIL has been filed by the Indian Federation of App-based Transport Workers, among others. The Uber India Systems Private Limited (UISPL) is one of the respondents in the matter which was last heard on April 11.
Specifically on Uber, the PIL notes: In UK, the Appeal Court came to a conclusion that a driver working for Uber is a “worker” with a “worker contract”, and is thus entitled to all benefits such as minimum wages etc; and in France, the Supreme Court has recognised the right of an Uber driver to be considered an “Employee”. Whereas in India, according to the PIL, the company is not ready to treat the drivers as “workers”. It notes that Uber has also stopped using the word “partner” in the agreement and now defines individuals utilising their app service for commercial gains as “customers”.
On March 7 this year, the Bombay High Court directed all taxi aggregators including Uber to apply for licences to ply. This was challenged by the company in the Supreme Court which ordered status quo on the HC direction — it is listed for hearing on Tuesday, July 12.
On the tax front, there are several pending and recently disposed of matters against Uber. The UISPL, in its declaration for 2020-21 before the Registrar of Companies (ROC), states that there is an outstanding demand of income tax of Rs 113.84 crore for the assessment year 2018-19. Uber’s appeal is pending before the Income Tax Appellate Tribunal.
On September 11, 2018, the Income Tax Commissioner (Appeals) in Mumbai ruled that Uber was an ‘assessee in default’ and, therefore, liable to collect and pay TDS of Rs 24.92 crore (for 2016-17 and 2017-18), but the Income Tax Appellate Tribunal in Mumbai turned down this ruling on March 4, 2021 and declared that it was not an ‘assessee in default’ under the Income Tax Act.
Uber got its first notice from a regulatory body on August 22, 2014 when the Reserve Bank of India (RBI) warned against evading additional authentication by following payment models which were resulting in foreign exchange outflow and violating the Payment and Settlement Systems Act, 2007 besides the Foreign Exchange Management Act.
It set October 31, 2014 as the deadline to comply with norms. The RBI warning stemmed from a complaint by The Association of Radio Taxis on August 9, 2014 — Kunal Lalani, president of the association, declined to comment.
The payment system was subsequently changed. From December 1, 2014, Uber stopped taking credit card payments directly and tied up with Paytm for necessary technology and clearances to process payments.
From July 13, 2015, Uber again started credit card payments on its app, with an authentication process in the app conforming to RBI guidelines.
The communications available in The Uber Files show that even before the RBI acted on the complaint, public policy advisors and public relations giants had stepped in.
On August 11, 2014, Manash K Neog of Chase India, a Delhi-based public policy and advocacy advisory firm, wrote to Mark Fielding, consultant with FIPRA, a Brussels-based firm which advises Uber on policy matters: “We can offer to Uber to deal with RBI (the central bank of India) and other related regulatory bodies here. This issue can get bigger from here for Uber.”
On August 14, 2014, Neog wrote to Mark MacGann — MacGann was with FIPRA from May to October 2014 dealing with Uber, and then joined Uber on November 1, 2014 — listing “regulatory challenges” like “Uber is violating foreign-exchange laws/FEMA”, “Uber is circumventing the two-stage credit card authentication mandatory by the RBI using an international payment gateway”, and “data privacy issue”.
He “suggested way forward” which included the “need to work with various influencers like civil society, NGOs, Consumer groups, industry chambers.”
Reached for comment, a spokesperson for Chase India told The Indian Express: “Chase India is an affiliate partner of FIPRA in India. In 2014, Chase India completed a brief one month project for FIPRA to provide a policy analysis and research piece regarding relevant policy landscape in India. Chase did not engage in any outreach to any entity or persons on behalf of FIPRA or Uber till date. Also, we neither were engaged directly by Uber then or anytime in the future till date.” FIPRA did not respond to queries from The Indian Express for comment.
A spokesperson for Uber said, “When Uber launched in India almost a decade ago, no ridesharing regulations existed at that time as the transportation laws did not conceive app-based ride sharing as an option. We have long championed rules and regulations that reflect changing technology and interest of cities and our customers — riders and drivers alike. As a category defining company, we applaud and support progressive regulatory change that is good for riders, drivers and cities.”
On customer complaints, the spokesperson said, “…We have a robust customer complaint reporting and redressal mechanism. We are proud to be the only ridesharing app in India that has integrated its system with the National Consumer Helpline. Our convergence with NCH since July 2019 has enabled us to seamlessly address and resolve additional complaints, that may not be received via our in-app reporting and redressal mechanism, in a timely manner through our specialised support escalation desk. While the Consumer Protection Rules, 2020, prescribe one month for resolution of a complaint, the time taken for resolution of complaints received via the NCH Portal is typically less than 72 hours.”
On the employment status of drivers, the Uber spokesperson said, “Drivers using the Uber app are independent workers, and are free to set their own hours, work on competing platforms and drive whenever they wish. The Indian parliament recently passed into law the Code on Social Security, which provides gig workers benefits such as life, disability and accident insurance; health and maternity benefits; as well as old-age protection. Gig economy companies, including Uber, are required to contribute funds for these benefits. We supported the creation of the Code on Social Security, and are calling on the government for its early notification and implementation.”
On the issue of tax, the spokesperson said, “We comply with all applicable tax obligations in India, and continue to work closely with the authorities in case of any tax related queries.”
