Key points of Rajasthan AAR Ruling in Airport Authority of India, Jaipur, Rajasthan Ruling for sale of airport to Adani

Transfer of airport operations by AAI to Adani exempt, however, salary cost reimbursement is taxable at 18% - Rajasthan AAR in re Airports Authority of India, Civil Airport Road, Jaipur [RULING NO. RAJ/AAR/2022-23/25, Dated 20-Mar-2023] Summary of the ruling:

1. The transfer of business from the Airport Authority of India to Adani Jaipur International Airport Limited is considered a supply under Section 7 of the CGST Act, 2017. 2. This transfer is not covered in clause 4 of schedule II of the CGST Act, which means GST is not leviable

3. The transfer is covered under Entry No. 2 of exemption Notification 12/2017-CT(R), which means GST is not leviable. 4. Ruling on whether GST is leviable on the transfer of assets is not required, based on the ruling in point 3.

5. Ruling on whether the transfer of assets is considered a service is not required, based on the rulings in points 2 and 3.

6. The concession fee paid by Adani Jaipur International Airport Limited to the Airports Authority of India is part of the consideration for the transfer of business, and GST is not leviable.

7. The consideration for the transfer is exempt from GST under Entry No. 2 of Notification 12/2017-CT(R) dated 28-06-2017, which means GST is not leviable.

8. GST is leviable on the invoice raised by the Applicant for reimbursement of salary/staff cost at a rate of 18% (9% CGST and 9% SGST).

9. GST is not applicable on the reimbursement claimed for Municipal tax, Property Tax, and Water Charges.

10. Reversal is required in accordance with Section 17(2)/(3) of the CGST Act and the RGST Act, which means there are tax implications. I hope you like this summary