MUMBAI- The Authority for Advance Ruling has ruled that transferring Jaipur international airport operations from the Airports Authority of India (AAI) to the Adani group is exempt from Goods and Services Tax (GST).
AAI had sought a ruling from the Rajasthan Authority for Advance Ruling (AAR) bench. Further, to clarify whether the transfer of the business to M/s Adani Jaipur International Airport Ltd would be considered as supply “as a going concern” and whether GST would apply to asset transfers.
Adani Jaipur Airport Deal
According to the Authority for Advance Ruling, transferring Jaipur international airport operations from the AAI to the Adani Group is considered a service under GST law.
As a transfer of the going concern, it is exempt from goods and services tax. This ruling was made on March 20, 2023, in response to the AAI’s query to the Rajasthan bench of the Authority for Advance Ruling. Which sought clarification on whether the transfer of the business to M/s Adani Jaipur Airport has been treated as a supply a going concern and whether GST was leviable on the transfer of assets.
In October 2021, the Adani Group took over Jaipur Airport’s management, operations, and development from the AAI. Furthermore, the government of India has leased the airport to the Adani Group for 50 years.
The AAR Rajasthan bench observed that similar business arrangements between AAI and a Special Purpose Vehicle (SPV) were previously considered a transfer of going concerned by the Gujarat and Uttar Pradesh benches of AAR in 2021 and 2022.
However, the AAR clarified that invoices issued by AAI for reimbursement of salary or staff cost to M/s Adani Jaipur International Airport Ltd. are classified as workforce services and are subject to GST at a rate of 18%.
According to AMRG & Associates Senior Partner Rajat Mohan, the AAR has decided that any revenue from the transfer of complete airport operations by the AAI is a tax-neutral supply.
Mohan added that this ruling would be compelling for future transfers of a similar nature by AAI in other parts of India.
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