Flying training services by DGCA-approved institutes exempt from GST under entry 66 of Notification 12/2017

The AAR, Maharashtra ruled that flying training services provided by an approved flying training institute to trainees are exempt from GST. The applicant qualified as an educational institute under entry no. 66 of Notification No 12/2017-Central Tax (Rate) as it was DGCA-approved with approved curriculum, and completion certificates were recognized under Aircraft Rules. The AAR applied principles from Circular No. 117/36/2019-GST regarding maritime training institutes, finding similar conditions existed for flying training institutes. Since DGCA conducts licensing examinations through approved centers and grants mandatory Commercial Pilot Licenses, the supply of flying training services for approved courses was held exempt from GST.

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Issues Involved:
1. Taxability of flying training services under GST.
2. Applicable GST rate if services are taxable.

Issue-wise Detailed Analysis:

1. Taxability of Flying Training Services under GST:

Facts and Contentions:
- The applicant, M/s. National Flying Training Institute Private Limited (NFTI), provides flying training services to trainees aspiring to obtain licenses and ratings from the Directorate General of Civil Aviation (DGCA).
- The training services include theoretical knowledge training, ground theoretical training, synthetic flight training, and flying training in air.
- The applicant contends that the completion of the flying training course is a qualification recognized by the Aircraft Laws and should be exempt from GST.

Applicant's Interpretation of Law:
- The term "recognized by law" is broad and includes qualifications approved by statutory bodies.
- The completion of the training course is a mandatory requirement for obtaining a Commercial Pilot's License (CPL) and is thus recognized by the Aircraft Act and Rules.
- The DGCA supervises and approves the training curriculum, making it an essential part of the qualification process.

Supporting Case Laws:
- The Delhi High Court in Indian Institute of Aircraft Engineering v. Union of India (2013) held that training provided by institutes approved by the DGCA is exempt from Service Tax as it is a qualification recognized by law.
- The Bombay High Court in National Flying Training Institute Private Limited v. CBEC (2023) agreed with the Delhi High Court, stating that the training provided by NFTI is recognized by law and exempt from Service Tax.

Jurisdictional Officer's Submission:
- The officer argued that the issue is sub-judice as appeals are pending in the Supreme Court against similar High Court judgments.
- The officer also contended that the GST Council should clarify the applicability of exemptions for flying training institutes.

Observations and Findings:
- The provisions of the GST Act and the Service Tax regime are similar, and the interpretation of "recognized by law" under Service Tax should apply to GST.
- The Bombay High Court's judgment in the applicant's own case under Service Tax is binding and applicable to the GST regime.
- The training provided by NFTI is part of an approved curriculum leading to a qualification recognized by law, fulfilling the conditions for exemption under GST.

Decision:
- The supply of flying training services provided by NFTI to their trainees for the completion of the approved course for Commercial Pilot License (Aeroplanes) is exempt from GST under entry at Sr. No. 66 of Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017.

2. Applicable GST Rate if Services are Taxable:

Decision:
- As the supply of flying training services is exempt from GST, the question of the applicable GST rate does not arise.

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