GST not applicable on transfer of Jaipur Int'l airport biz to Adani group

The transfer of Jaipur international airport operations by 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 ruling on whether transfer of business to M/s Adani Jaipur International Airport Ltd is treated as supply as 'going concern' and whether GST is leviable on transfer of assets.

Transfer of business as a going concern, as a whole, or independent part thereof, is considered as 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 concern.

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 concern.

However, the invoice raised by AAI for reimbursement of salary /staff cost on M/s Adani Jaipur International Airport Ltd is a supply which falls under the ambit of manpower service and hence taxable at 18 per cent under GST.

AMRG & Associates Senior Partner Rajat Mohan said the AAR has ruled that considerations received from transfer of running business of whole airport operations by 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 .