NEW DELHI: The transfer of Jaipur international airport operations by the Airports Authority of India (AAI) to the Adani group is exempt from Goods and Services Tax (GST), the Authority for Advance Ruling has said.
The AAI had approached the Rajasthan bench of the Authority for Advance Ruling (AAR) seeking a ruling on whether the transfer of the business to M/s Adani Jaipur International Airport Ltd is treated as supply as 'going concern' and whether GST is leviable on the transfer of assets.
Transfer of business as a going concern, as a whole, or an independent part thereof, is considered a service under GST law and such supplies are exempt from goods and services tax.
In its ruling dated March 20, 2023, the AAR said the business arrangement entered vide concession agreement dated January 16, 2021, between the applicant (AAI) and M/s Adani Jaipur International Airport is a transfer of going concerned.
The Adani Group had in October 2021, taken over the operations, management and development of the Jaipur International Airport from the AAI.
The airport has been leased out to the group by the government of India for a period of 50 years.
The Rajasthan bench of the AAR also noted that in 2021 and 2022, the Gujarat and Uttar Pradesh benches of AAR too had ruled that business arrangements between AAI and Special Purpose Vehicle (SPV) are covered under transfer of going concerned.
However, the invoice raised by AAI for reimbursement of salary /staff cost on M/s Adani Jaipur International Airport Ltd is a supply that falls under the ambit of manpower service and hence is taxable at 18 per cent under GST.
AMRG & Associates Senior Partner Rajat Mohan said the AAR has ruled that considerations received from the transfer of running the business of whole airport operations by the Airport Authority of India is tax-neutral supply.
"This ruling will have strong persuasive for any other similar transfers by AAI in other locations of India," Mohan said .