The Hindu Business Line : GMR airport gets extension of VAT relief

Hyderabad, June 13 GMR Hyderabad International Airport Ltd (GHIAL), which promotes the Rajiv Gandhi International Airport at Shamshabad, has got an extension of VAT exemption up to December 31, 2008.

Appealing for an extension, the GMR group company had argued that though the “airport commences operations, it should not be treated as completion of the project as the project would be complete only after installation of all the facilities envisaged in it.”

“Hence, we need the extension,” the letter, written on March 6, 2008, said. Acting on the representation, the Revenue Department issued a new order (No. 589) on April 10, 2008, extending the VAT refund provision till December 31, 2008.

The company had so far received VAT refunds of about Rs 60 crore, since the passing of the original GO (No. 1254) issued on July 2, 2005. The latter GO was to be in force till December 31, 2009 or completion of the project, “whichever is earlier”.

Though the airport commenced operations on March 23, 2008, the company wanted extension of the order.

Original GO

The original GO said that the Government found it necessary in public interest to refund the taxes paid by GHIAL and contractors and sub-contractors engaged by it on their purchases of goods to the sellers.

It, however, mandated that the goods bought should be exclusively used for the airport use.

The GO also provided for refund of tax on works contracts related to the project. The order came into effect from April 1, 2005. Work on the site had begun on March 16, 2005.

Though the airport was formally inaugurated on March 14, 2008 by Ms Sonia Gandhi, Chairperson of UPA’s National Advisory Council, it officially commenced operations on March 23.

GMR’s line

The GMR letter also said that it took a while before submission of bills by the contractors and their ratification by the project management team. “They need to redo the bills, depending on the changes suggested by the team. There are bills worth Rs 43 crore that are yet to be submitted,” it said, appealing for the extension of the order.

The State Government holds 13 per cent equity in the Rs 2,800-crore greenfield airport project.

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