Pilot training services for ATR extension subject to GST as they don't qualify for exemption under entry 66(a) of Notification 12/2017

The AAAR-UP upheld that pilot training services for ATR extension do not qualify for GST exemption under entry 66(a) of Notification 12/2017. The appellant provided training to commercial pilots for DGCA-approved ATR extension curriculum but only issued course completion certificates, not qualifications recognized by law. The DGCA conducted actual examinations and recorded extensions on pilot licenses. The court distinguished this from Aircraft Maintenance Engineering training cases where institutes could conduct examinations yielding recognized qualifications. The training merely provided prerequisite documentation for DGCA examination applications rather than resulting in legally recognized qualifications, thus remaining subject to GST.

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Issues Involved:

1. Whether the supply of education and training services to commercial pilots for obtaining the extension of Aircraft Type Ratings (ATR) on their existing licenses is exempt under SI. No. 66(a) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.
2. Whether the Appellant qualifies as an "educational institution" under the relevant GST notifications.
3. Whether the course completion certificate issued by the Appellant is recognized by law.

Summary:

1. Exemption Under Notification No. 12/2017-Central Tax (Rate):
The Appellant argued that their training services should be exempt from GST under SI. No. 66(a) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as they provide training in accordance with the curriculum approved by the Directorate General of Civil Aviation (DGCA). The Authority for Advance Ruling (AAR) had previously ruled that these services are not exempt under the said notification.

2. Qualification as an Educational Institution:
The Appellant contended that they qualify as an "educational institution" because they provide training that is part of a curriculum approved by the DGCA, which is necessary for obtaining a qualification recognized by law. The Appellate Authority examined whether the training provided by the Appellant meets the criteria of being part of a curriculum, yielding a qualification, and being recognized by law.

3. Recognition of Course Completion Certificate by Law:
The Appellant claimed that the course completion certificate issued by them is recognized by law, as it is a prerequisite for pilots to apply for the extension of ATR with the DGCA. The Appellate Authority found that the certificate issued by the Appellant merely enables pilots to apply for the DGCA examination and does not, by itself, confer any statutory qualification. The DGCA's endorsement of the license after passing its examination is the statutory requirement, not the course completion certificate from the Appellant.

Findings:

1. Commercial Activity and Supply:
The Appellant's activity of providing Type Rating Training on simulators is a commercial activity and falls under the definition of "Services" in terms of Section 2(102) of the CGST Act 2017. These services are classifiable under SAC 9992 94 as "Other Education & Training Services."

2. Criteria for Educational Institution:
The Appellate Authority observed that to qualify as an educational institution under the notification, the services provided must be part of a curriculum, yield a qualification, and the qualification must be recognized by law. The Appellant's training program does not meet these criteria as the course completion certificate is not a qualification recognized by law but a prerequisite for appearing in the DGCA examination.

3. Statutory Requirement and Employment:
The Appellant's training does not directly result in a qualification or enable immediate employment. The DGCA examination and subsequent endorsement are the statutory requirements for pilots to be qualified to fly specific aircraft.

4. Reliance on Previous Cases and Circulars:
The Appellant's reliance on previous cases and circulars was found to be inapplicable as the facts and legal provisions differed. The DGCA does not recognize the Appellant's certificate as a statutory qualification, unlike the maritime courses approved by the Directorate General of Shipping.

Ruling:
The Appellate Authority upheld the ruling of the Authority for Advance Ruling that the services provided by the Appellant are not covered under entry number 66(a) of Notification 12/2017-Central Tax (Rate) dated 28-06-2017, and hence do not qualify for exemption from GST. The appeal was dismissed.

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