Aircraft type rating simulator training services remain taxable as they don't qualify for GST education exemption

The UP AAR ruled that training services provided to commercial pilots for aircraft type rating extensions do not qualify for GST exemption under notification provisions. The applicant conducted simulator training per DGCA-approved curriculum but did not issue licenses, degrees, or diplomas - only course completion certificates. The AAR held that since the applicant merely prepares trainees for DGCA examinations without providing statutory qualifications, and employment eligibility depends on DGCA license endorsement rather than course completion, the services cannot be considered education under a curriculum for legally recognized qualifications, thus remaining taxable under CGST and UPGST.

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Issues Involved:
1. Applicability of a notification issued under the provisions of the Act.
2. Determination of the liability to pay tax on any goods or services or both.

Issue-Wise Detailed Analysis:

1. Applicability of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017:

The applicant sought an advance ruling on whether the supply of education and training services to commercial pilots for obtaining the extension of aircraft type ratings on their existing licenses would be exempt from GST under Sl. No. 66 (a) of the Notification No. 12/2017-Central Tax (Rate) dated 28.6.2017.

The relevant portion of Notification No. 12/2017 exempts services provided by an educational institution to its students, faculty, and staff. The definition of "educational institution" includes institutions providing services by way of:
- Pre-school education and education up to higher secondary school or equivalent.
- Education as part of a curriculum for obtaining a qualification recognized by any law for the time being in force.
- Education as part of an approved vocational education course.

The applicant argued that their training services qualify as education services under SAC 999294 and should be exempt from GST as they fall under the definition of an educational institution providing education as part of a curriculum for obtaining a qualification recognized by law.

2. Determination of the Liability to Pay Tax:

The applicant is engaged in facilitating the training of commercial pilots on aircraft simulators as per the curriculum approved by the Directorate General of Civil Aviation (DGCA) for obtaining the extension of aircraft type ratings on their existing licenses. The applicant contended that their services should be exempt from GST based on the following points:
- The training provided is approved by the DGCA and is part of a curriculum for obtaining a qualification recognized by law.
- The completion of the training program is necessary for pilots to apply for the extension of aircraft type ratings, which is a qualification recognized by the DGCA.

Discussion and Findings:

The authority examined whether the training services provided by the applicant qualify for exemption under Sl. No. 66 (a) of the Notification No. 12/2017. The key points considered were:
- The applicant's training organization is approved by the DGCA, and the training is conducted as per the DGCA-approved curriculum.
- The applicant does not provide any license, degree, or diploma certificate to the trainees; they only conduct training courses to help trainees accumulate ratings for flying specific aircraft.
- The issuance and granting of commercial pilot licenses fall under the exclusive domain of the DGCA, and the applicant's training does not directly result in obtaining a qualification recognized by law.

The authority concluded that merely conducting a training course or its completion does not constitute a qualification recognized by law. The fact that the DGCA may consider the completion of such courses for evaluating experience and training content does not make it statutory in character.

Ruling:

The authority ruled that the supply of education and training services to commercial pilots for obtaining the extension of aircraft type ratings on their existing licenses is not exempted under Sl. No. 66 (a) of the Notification No. 12/2017-Central Tax (Rate) dated 28.6.2017. The training services provided by the applicant do not qualify as services provided by an educational institution for obtaining a qualification recognized by law, and therefore, are subject to GST.

Conclusion:

The applicant's training services do not fall under the exemption provided by Sl. No. 66 (a) of the Notification No. 12/2017-Central Tax (Rate) dated 28.6.2017, and are liable to GST.

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