The Australian Taxation Office has argued during the first directions of Uber B.V v The Commissioner of Taxation of the Commonwealth of Australia on Tuesday that UberX drivers fall within the same definition as taxi and limousine drivers, and therefore should be required to pay the Good and Services Tax (GST).
The ATO defined taxi travel as "travel that involves transporting passengers for fares".
The argument was heard by Justice Griffith at the Federal Court of Australia.
Uber, on the other hand, disputed that the court should question whether UberX drivers fall under same definition as taxi travel.
"The issue at question is what UberX drivers supply when they take passengers, and whether it falls in the meaning of taxi travel in the dictionary," the company said.
Uber went on to state that full evidence needs to be taken into consideration to help "characterise" what UberX drivers do, and what taxi and limousine drivers do. This was unlike the ATO that suggested only certain agreed facts need to be presented to understand the definition and the role UberX drivers play.
Justice Griffiths ordered for the ATO and Uber to both submit lay and expert evidence before the case resumes for another directions on December 15, 2015. Griffith said he hopes by then he will then be able to set a hearing date.
The first directions comes after the ATO issued a directive in May that advised those providing a ride-sharing service needed to have an Australian Business Number and be registered for GST.
However, Uber disagreed and filed documents with the Federal Court against the Australian Taxation Office in early August in hope to overturn the directive.
At the time, the controversial ride-sharing company argued that the public issue by the ATO "unfairly targets Uber's driver-partners".
Earlier in the year, Uber called for regulation to allow it to operate legally.
"We're happy to pay all of the applicable taxes, and we do already," Uber's Australia and New Zealand general manager David Rohrsheim told the ABC at the time.
Uber was recently in court facing legal action in Western Australia for not having the right licence to operate, while cities such as São Paulo and Montreal have enacted various bans on Uber in recent months.