AAI has not paid Rs 288-cr service tax

The Airport Authority of India (AAI) has allegedly evaded paying Rs 288 crore as service tax over the last three years. This is a rare case of a government-run body being charged with tax evasion.

The Airport Authority of India (AAI) has allegedly evaded paying Rs 288 crore as service tax over the last three years. This is a rare case of a government-run body being charged with tax evasion.

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The Delhi Service Tax Commissionerate, which recently scrutinised AAI’s income records for 2006-07, 2007-08 and 2008-09, last week issued a show cause notice to AAI, which manages 126 airports and 26 civil enclaves at defence airfields across India, asking why action should not be taken over its failure to pay the tax on its taxable income of Rs 2,342 crore during these three years.

An audit of AAI’s records revealed that it had entered into two separate agreements with Delhi International Airports Pvt Ltd (DIAL) for managing Indira Gandhi International Airport in the national capital and Mumbai International Airport Pvt Ltd (MIAL) for Chhatrapati Shivaji International Airport, Mumbai. The two airports were handed over to DIAL and MIAL in May 2006.

“The operation, management and development agreements entered into by AAI with the two companies are transfer of services pacts. The one-time and annual fees charged by AAI from these two companies are taxable under the law,” said a top service tax official who did not want to be identified.

Asked about the notice, AAI’s Member (Finance) S.C. Chhatwal told HT: “I haven’t received the notice yet. We’ll deal with it after we receive it.”