In re Airport Authority of India (GST AAR Gujarat)
1. Whether the transfer of business by the AAI to the M/s. Adani Ahmedabad International Airport Limited be treated as Supply u/s. 7 of the Central Goods and Service Tax Act, 2017 (“CGST”) viz-a-viz Gujarat State Goods and Service Tax Act, 2017 (“GSGST”)?
The Subject Supply of ‘Transfer of Going Concern service’ is Supply under Section 7 CGST Act.
2.Whether the transfer of business by AAI to M/s. Adani Ahmedabad International Airport Limited is treated as supply as going concern and covered in clause 4 of schedule II of CGST Act viz-a-viz GSGST?
i. The subject Supply is ‘Transfer of Going Concern Service’.
ii. Schedule II (4) CGST Act refers to activities or transactions relating to Transfer of business assets to be treated as supply of goods or supply of services. Therefore, in present case, there arises no need to examine Schedule II(4) CGST Act.
3. Whether the transfer of business by AAI to M/s. Adani Ahmedabad International Airport Limited is covered under the Entry No. 2 of the exemption notification No 12/2017 – Central Tax (Rate) dated 28-06-2017 issued u/s Section 11 of CGST Act 2017?
The subject Supply is covered at Entry No. 2 of notification No 12/2017 – Central Tax (Rate) dated 28-06-2017
4. If the answer is negative, then whether GST is leviable on the transfer of Existing assets (“RAB”), Aeronautical Assets, non-aeronautical assets and Capital work in progress by AAI to the M/s. Adani Ahmedabad International Airport Limited?
Ruling not required, in pursuance to Ruling at serial no 3.
5. Whether the aforesaid transfer of asset be treated as services and the classification for the same?
Ruling not required, in pursuance to Rulings at serial no 2 & 3.
6. Whether the concession fees paid by M/s. Adani Ahmedabad International Airport Limited to AAI be treated as consideration for transfer of business?
Concession Fee is a part of the Consideration paid by SPV to AAI in subject matter.
7. Whether GST is applicable on Monthly/Annual concession fees charged by the AAI on the M/s. Adani Ahmedabad International Airport Limited?
The consideration for the subject Supply is exempt from GST vide Entry No. 2 of Notification No.12/2017 – Central Tax Rate dated June 28, 2017.
8. Whether GST is leviable on the invoice raised by AAI for reimbursement of the salary/ staff cost on M/s. Adani Ahmedabad International Airport Limited? If yes at what rate?
Ruling same as at Sr no 7. Further, the issue of reimbursement of staff cost has arisen in pursuance to the terms of subject Contract dated 14-2-20 wherein the ‘the Supply of Transfer of Going concern Service’ is exempt from GST. The contract is for ‘transfer of going concern service’, therefore the consideration / reimbursement of cost is exempt from GST.
9. Whether GST is applicable on the reimbursement claimed of Municipal tax, Property Tax and Water Charges by the AAI from M/s. Adani Ahmedabad International Airport Limited? If yes at what rate?
Ruling same as at Sr. No 7. Further, the issue of reimbursement has arisen in pursuance to the terms of subject Contract dated 14-2-20 wherein the ‘Supply of Transfer of Going concern Service’ is exempt from GST. The contract is for ‘transfer of going concern service’, therefore the consideration / re-imbursement of cost is exempt from GST
10. Whether GST is applicable on transfer of spares and consumables for consideration by the AAI to M/s. Adani Ahmedabad International Airport Limited? If yes at what rate?
GST on proposed supply of spares and consumables by AAI to SPV, these supplies being outside the scope of subject contract, is leviable to tax as per law, as discussed at paragraph 27.3 of this Ruling.
FULL TEXT OF THE ORDER OF AUTHORITY OF ADVANCE RULING, GUJARAT
1. M/s. Airport Authority of India (hereinafter referred to as AAI, for the sake of brevity) is an authority created under the Airport Authority of India Act, 1994 ( hereinafter referred to as the AAI Act). The AAI Act was enacted to provide for the constitution of the AAI for the better administration and cohesive management of the airports. AAI has been created for the purpose of establishing or assisting in the establishment of airport and for the matters connected thereto.
2. As per Chapter III, Section 12(1), (2) of AAI Act, the functions of the AAI are :
(i) To manage the airports, the civil enclaves and the aeronautical communication stations efficiently;
(ii) To provide air traffic service and air transport service at any airport.
3. Further, AAI may undertake various activities specified in Section 12(3) of AAI Act, as required from time to time to achieve the above object such as:
(i) Plan, develop, construct and maintain runways, taxiways, aprons, terminals and ancillary building at the airports and civil enclaves;
(ii) Establish airports or assist in the establishment of private airports by rendering such technical, financial or other assistance which the Central Govt. may consider necessary for such purpose;
(iii) Plan, procure, install and maintain navigation aids, communication equipment, beacons and ground aids at the airports and at such location as may be considered necessary for safe and operation of aircrafts;
(iv) Provide air safety services and search and rescue, facilities in co-ordination with other agencies;
(v) Establish and maintain hotels, restaurants and restrooms at or near the airports;
(vi) Arrange for postal, money exchange, insurance and telephone facilities for the use of passengers and other persons at the airports and civil enclaves;
(vii) Regulate and control the plying of vehicles, and the entry and exit of passengers and visitors, in the airports and civil enclaves with due regard to the security and protocol functions of the Govt. of India.
(ix) Develop and provide consultancy, construction or management services and undertake operations in India and abroad in relation to airports, air navigation service, ground aids and safety services or any facilities threat.
(x) Establish and manage heliports and strips;
(xi) Provide such transport facility as are, in the opinion of the Authority, necessary to the passengers travelling by air;
(xii) Take all such steps as may be necessary or convenient for, or may be incidental to, the exercise of any power or the discharge of any function conferred or imposed on it by AAI Act;
(xiii) Perform any other function considered necessary or desirable by the Central Government for ensuring the safe and efficient operation of aircraft to, from and across the air space of India;
(xiv) Establish training institutes and workshops;
(xv) Any other activity at the airport and the civil enclaves in the best commercial interests of the Authority including cargo handling, setting up of joint ventures for the discharge of any functions assigned to the Authority.
4. Section 12 A of the AAI Act allows AAI, in the Public interest or in the interest of better management of airports, to make lease of the premises of an Airport (including building and structures thereon and appearing thereof) to carry out some of its functions under section 12 as the AAI may deem fit.
5. In the pursuance to Section 12A of AAI Act, the AAI has invited bids for undertaking the operation, management and development of certain airports of the AAI on a public private partnership basis to bring efficiency in service delivery, expertise, enterprise and professionalism and to harness necessary investment.
6. Single stage two envelop system through Central Public Procurement Portal was followed for selection of successful bidder for the Operation, Management and Development of Sardar Vallabhai Patel Airport for a lease period of 50 years (‘Project’). Request for proposal (RFP) documents for the Airport was issued on 14-12-18. The Project would be implemented in accordance with the terms and conditions stated in the RFP and Concession Agreement dated 14-2-20 entered into between the Authority and the Concessionaire ( the selected bidder).
7. In 2019, Airports Authority of India conducted PPP (Public Private Partnership) bidding process in which M/s. Adani Enterprises Limited (the “Concessionaire”), an Ahmedabad-based business conglomerate had won the bid of the airport quoting highest bid among all.
8. The Concessionaire agrees to pay to AAI the following sum as consideration for transfer: –
