2023 (6) TMI 1228 - AAR - GST

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

In Re: M/s. CAE Simulation Training Private Limited,

The UP AAR ruled that training services provided to commercial pilots for aircraft type rating extensions do not qualify for GST exemption under ... Exemption from CGST and UPGST - supply of education and training services to commercial pilots in accordance with the training curriculum approved by the Directorate General of Civil Aviation for obtaining the extension of aircraft type ratings on their existing licenses - to be covered under Si. No. 66 (a) of the Notification No. 12/2017-Central Tax (Rate) dated 28.6.2017 and Si. No. 66 (a) of the Notification No. A.NI-2-843/X1-9(47)/ 17- U.P. Act-1-2017-Order- (10) -2017 dated 30.6.2017 or not? - HELD THAT:- The applicant is engaged in the business of facilitating the training of commercial pilots on the Aircraft Simulators installed at its training facilities. Such training is provided in accordance with the training curriculum approved by the Directorate General of Civil Aviation (hereinafter referred to as “DGCA”) for obtaining the extension of aircraft type ratings on their existing licenses. Whether the supply of education and training services to commercial pilots in accordance with the training curriculum approved by the Directorate General of Civil Aviation for obtaining the extension of aircraft type ratings on their existing licenses would be covered under Si. No. 66 (a) of the Notification No. 12/2017-Central Tax (Rate) dated 28.6.2017? - HELD THAT:- The applicant does not provide any licence to the pilots as they are not the competent authority. Issuance and granting of commercial pilot licenses falls under the exclusive domain of DGCA. The applicant is only conducting training courses which helps the trainees to increase/accumulate ratings for flying specific aircrafts. Moreover, the trainees will have to undergo skill test when they complete simulator training at the institute. It is based on the results of these tests and examination and after fulfillment of other parameters that the DGCA would endorse the type ratings of aircraft in the licenses of trainee pilots. Therefore merely conducting a course or its completion is not a qualification which is recognized by law. The fact that such a completion of course may be taken into account by the DGCA for the purpose of evaluating the experience and content of training, will not make it statutory in character. The applicant, during the course of personal hearing, accepted that they do not provide any licence, degree or diploma certificate to the trainees. It is just the completion of training course which is mentioned. It is observed that there is no statutory requirement for the course completion certificate which enables the trainee pilots to apply to DGCA for appearing in the examination conducted by it. It is the examination conducted by the DGCA which is the statutory requirement and not any examination by the applicant. The applicant is merely preparing the trainees for such Type Rating Examinations - Hence, it cannot be construed that the applicant is an educational institute which provides services by way of education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force. The applicant has declared that the training course conducted by them enables the pilots to get employment in the commercial airlines. This view of the applicant is not supported by the facts. Because the trainees after undergoing type rating training courses with the applicant will not be able to get employment with the airlines directly. As per Rule 6A of the Aircraft Rules, no person shall fly as pilot of an aircraft which is not included or entered in the Aircraft rating of the licence. Meaning thereby, a trainee can fly an aircraft and consequently seek employment with an airlines only after his or her licence has been endorsed with the aircraft rating for the specified aircraft by the DGCA - a commercial pilots licence holder cannot seek the job of flying an aircraft for which he has undergone Type Rating Training unless an endorsement to that effect is made in the licence of the CPL holder by the DGCA. It is the endorsement which makes him eligible to obtain employment with Airlines to fly the aircrafts for which he has been type rated and not the fact of having completed the training with the institute. The supply of education and training services to commercial pilots in accordance with the training curriculum approved by the Directorate General of Civil Aviation for obtaining the extension of aircraft type ratings on their existing licenses is not exempted under Si. No. 66 (a) of the Notification No. 12/2017-Central Tax (Rate) dated 28.6.2017. 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.