Industry Odisha Bureau,Sep 13: Gujarat AAR has ruled Airbus’s C-295 aircraft supplies are taxable. Airbus needs GST registration in Gujarat. Tata Advanced Systems assembles the aircraft at Vadodara for the Defence Ministry.
AAR Rules on Airbus C-295 Supplies
Airbus will need GST registration in Gujarat, the state’s Authority for Advance Ruling has said. The ruling covers supplies of 40 aircraft to the Defence Ministry. It was pronounced on September 11. The applicant’s project office is liable to pay GST in India. Tata Advanced Systems is assembling the aircraft at Vadodara.
Why Gujarat GST Registration Is Required
The AAR examined the actual contractual flow of the transaction. Manufacturing and subsequent supply both occur in Gujarat. Tata Advanced Systems manufactures the aircraft as Indian Aircraft Contractor. Title then passes to Airbus at Vadodara. Airbus subsequently supplies the aircraft to the Defence Ministry. This contractual structure proved important for the ruling.
₹19,145-Crore Supply Exceeds GST Threshold
The registration threshold for goods outside special category states is ₹20 lakh. The transaction value for the 40 aircraft is ₹19,145 crore. This substantially exceeds that threshold, the AAR noted. The project office therefore needs registration where the supply originates.
Tata Builds 40 C-295 Aircraft in Vadodara
Tata Advanced Systems was appointed Indian Aircraft Contractor for the 40 aircraft. This forms the Make in India component of the programme. TASL manufactures and supplies the aircraft to Airbus. Airbus then supplies them onward to the Defence Ministry. Production technology will be transferred by Airbus to TASL.
Airbus C-295 Contract Covers 56 Aircraft
Airbus Defence and Space received the contract in 2021. It covers 56 C-295MW aircraft and associated equipment. The overall contract is valued at ₹21,935 crore. The first 16 aircraft arrive from Spain in flyaway condition. The remaining 40 are manufactured in India.
Government Buyer Does Not Ensure GST Exemption
The Defence Ministry being the recipient does not automatically exempt the supply. No specific exemption applied to these aircraft, according to Amit Maheshwari of AKM Global. The absence of that exemption kept the supply taxable. This placed the registration requirement on the Gujarat project office.
AAR Ruling Highlights Contract Manufacturing
Maheshwari said the AAR looked beyond the physical manufacturer. It instead traced the full contractual flow of the supply. Title transfer at Vadodara mattered for the GST determination. This could hold wider relevance for contract-manufacturing arrangements generally. That is especially true where manufacturer and final supplier differ.
Closing
Deliveries of the 40 Indian-built aircraft begin 60 months after contract signing. They are scheduled for completion within 119 months. Airbus is setting up its Gujarat project office. The case illustrates how contractual structure, not just manufacturing location, shapes GST liability in complex defence-manufacturing arrangements.
