The Kerala bench of the GST Authority for Advance Ruling (AAR) ruled that the concessionaire agreement between the AAI (Airport Authority of India) and Adani Thiruvananthapuram International Airport Ltd is liable to GST since it is not a “transfer of business” but supply of services.
This ruling is in direct conflict with rulings passed by the Appellate Authority for Advance Ruling (AAAR) in Rajasthan and Gujarat regarding the transfers of Jaipur and Ahmedabad airports, respectively. These state bodies exempted GST on almost identical transfers.
Back in March 2023, the Rajasthan bench of AAR said that the considerations received from the transfer of running business of whole airport operations are a “tax neutral supply”, which could persuade similar transfers in other locations in India. However, the almost identical agreement between Adani’s airport arm and AAI is now treated differently.
The 2021 handover of the Thiruvananthapuram airport was met with strong politicalopposition from both the ruling left LDF and opposing UDF alliances. However, it garnered local support in Thiruvananthapuram when social media groups, including IT professionals and residents, actively lobbied for better amenities, which, according to them, were allegedly absent in the capital city airport when compared to the PPP facilities at Cochin International Airport.
According to GST law, the transfer of a business as a going concern, as a whole or an independent part thereof, is considered a service, and such supplies are exempt from the goods and services tax. The Rajasthan AAR ruled in 2023 that the 2021 Jaipur Airport pact was a transfer of going concern and, therefore, GST exempt.