The Authority for Advance Ruling has said that the transfer of Jaipur International Airport operations by the Airports Authority of India (AAI) to Adani Group is exempt from Goods and Services Tax (GST).
AAI had approached the Rajasthan-bench of the Authority for Advance Rulings (AAR) whether the transfer of business to Adani Jaipur International Airport Limited should be treated as a ‘going concern’ and whether GST could be levied on the transfer of assets. Is. ,
Transfer of business, whether as a whole or an independent part of a moving entity, is treated as a service under the GST law and such supply is exempt from Goods and Services Tax.
In its judgment dated March 20, 2023, the AAR held that the commercial arrangement entered into between the applicant (AAI) and M/s Adani Jaipur International Airport vide Concession Agreement dated January 16, 2021 is a transfer of going concern.
Adani Group took over the operation, management and development of Jaipur International Airport from AAI in October, 2021. The airport has been leased 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 the AAR had also ruled that the business arrangement between AAI and the Special Purpose Vehicle (SPV) came under transfer of going concern.
However, the invoice raised by AAI for reimbursement of salary/staff cost at M/s Adani Jaipur International Airport Limited is a supply which falls under the purview of manpower service and hence taxable under GST at 18 per cent.
AMRG & Associates Senior Partner Rajat Mohan said that the AAR has ruled that the consideration received by the Airport Authority of India from transfer of the running business of the entire airport operations is a tax neutral supply.
“This decision will be a strong motivator for any other similar transfers by AAI in other places in India,” Mohan said.