The Uttar Pradesh Authority of Advance Ruling (AAR) has held that no Goods and Services Tax (GST) is applicable on concession fees paid by Adani Lucknow International Airport Limited to the Airport Authority of India (AAI).
The applicant, the Airport Authority of India (AAI), accepted the bid of Adani Enterprise Limited and executed the concession agreement for 50 years for undertaking the operations, management, and development of the Chaudhary Charan Singh International Airport on a public-private partnership basis to bring efficiency in service delivery, expertise, enterprise, and professionalism and to harness necessary investment.
The applicant approached the AAR to know whether the concession fees paid by Adani Lucknow International Airport Limited to the Airports Authority of India be treated as consideration for the transfer of business and GST applicable on the concession fee paid.
The Authority observed that the consideration for transfer of business may be as per the terms and conditions of the contract and there is no restriction on the consideration being upfront/ one time/ in installments. Concession fees are payable by Adani Lucknow International Airport Limited to AAI during the concession period, calculated on a formula based on passenger footfall. The same is part of the consideration for the transfer of business assets.
The Coram of Mr. Abhishek Chauhan, Member (Central Tax), and Mr. Vivek Arya, Member (State Tax) has held that the monthly/annual concession fees is also part of consideration for transfer of business assets and exempted from GST as per Entry no. 2 of Notification No. 12/2017-CT.
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