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), the Advance Ruling Authority said.

AAI has approached the Authority for Advance Rulings (AAR) of Rajasthan-bench to ascertain whether the business transfer to M/s Adani Jaipur International Airport Ltd is considered a “going concern” supply and whether GST is to be imposed on the transfer of assets.

The transfer of a going concern as a whole or its separate parts is considered a service under the GST Act, and such supplies are exempt from GST.

In its decision dated March 20, 2023, the AAR stated that the vide concession arrangement dated January 16, 2021, between the Applicant (AAI) and M/s Adani Jaipur International Airport is a transfer of a going concern.

Adani Group took over Jaipur International Airport’s operation, management and development from AAI in October 2021. The airport has been leased to the group by the Indian government for 50 years.

The AAR’s Rajasthan bench also noted that in 2021 and 2022, the AAR’s Gujarat and Uttar Pradesh benches have also ruled that the business arrangement between AAI and a special purpose vehicle (SPV) is included in the going concern transfer.

However, invoices issued by AAI for reimbursement of wages/staff costs to M/s Adani Jaipur International Airport Ltd fall within the scope of manpower services and are therefore taxed at 18% under GST.

Rajat Mohan, the senior partner at AMRG & Associates, said the AAR had ruled that the consideration received by the Airports Authority of India for the transfer of the entire airport operations business was a tax-neutral provision.

Mohan said the ruling would be highly persuasive for any similar transfers made by AAI in other parts of India.