TaxTMI 
TaxTMI 
2023 (3) TMI 1115
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....engaged in the business of providing type rating training on simulators for various fleet of aircraft to the trainees aspiring to obtain licenses and ratings from the DGCA; that the flight training services imparted by the applicant (ATO) enhances the skill and knowledge of trainees. 3. In view of the above, the applicant has sought advance ruling in respect of the following question:- Whether the supply of the aircraft type rating 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 and SI. No. 66 (a) of the Notification No. A.NI.-2-843/Xl-9(47)/ 17- U.P. Act-1-2017-Order- (10) -2017 dated 30.6.2017, and thereby, exempted from levy of Central Goods and Service Tax & Karnataka Goods and Service Tax. 4. Admissibility of the Application : The applicant claimed that the question on which advance rulings has been sought is with regard to "Determination of the liability to pay tax on any goods or services or ....
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....ith the training curriculum approved by the DGCA to the trainees for obtaining the licenses and ratings specified in Rule 38 of the Aircraft Rules, 1937, and for obtaining aircraft type ratings (hereinafter referred to as "ATRs") thereafter. 5.6 Under Section 5(2) of the Aircraft Act, 1934, the Central Government has been empowered to make Rules in respect of the licensing of persons engaged in the operation of aircrafts, and the manner and conditions of the issue or renewal of any such licenses. In pursuance of the provision of Section 5 of the Aircraft Act, the Aircraft Rules, 1937 have been notified. 5.7 Further, Section 5A of the Aircraft Act empowers the DGCA to issue directions in respect of the topics covered under Section 5(1) and 5(2). It is understood that Section 5A read with Rule 133A of the Aircraft Rules have empowered the DGCA to issue the Civil Aviation Requirements (hereinafter referred to as "CARs"). 5.8 On the other hand, Rule 4 IB of the Aircraft Rules provides for the setting up of Flying Training Organisations (hereinafter referred to as "FTOs"), which provide training in respect of aircrafts below 5700 kgs all-up-weight (hereinafter referred to as "A....
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..... 5.15 Further, it is notable that the pilots holding the CPL(A) have to mandatorily undergo the ATR extension training for the specific type of aircraft(s) that they will be flying with any commercial airlines, i.e. the pilots cannot fly for any commercial airlines unless they hold the ATR for certain particular aircrafts that they fly in the ordinary course of business. 5.16 After completing the training with the Applicant, the pilots have to file an application for the extension of ATR, and the documents required to be submitted with the said application have to be issued by the ATO where the applicant has undergone the ATR extension training. Sample copies of the course completion certificates/graduation certificates issued by the Applicant have been enclosed as Annexure-4. The Applicant charges course fee for providing the training Programme. 6. Applicant's Interpretation of Law: 6.1 DETERMINATION OF THE TAXABILITY OF THE SUPPLY Relevant legal provisions Supply 6.2 In order to determine the taxability of the training provided by the Applicant, it is important to examine whether there is a supply under the GST law. 6.3 For this purpose, reference can ....
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....- 6.9 The relevant entry of the Exemption Notification and the Explanation in that regard have been extracted below: 66 Heading 9992 or Heading 9963 Services provided - (a) by an educational institution to its students, faculty and staff; Nil Nil "2. Definitions. - For the purposes of this notification, unless the context otherwise requires,- ..................... (y) "educational institution" means an institution providing services by way of,- (i) pre-school education and education up to higher secondary school or equivalent; (ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force; (iii) education as a part of an approved vocational education course;" 6.10 In terms of the above entries, the education services classified under Heading 9992 will be chargeable to GST @ 18% under SI. No. 30 of the Rate Notification, unless they fall under any of the exemptions provided under the Exemption Notification. Composite supply 6.11 Reference is made to Section 2(30) of the CGST Act, wherein "composite supply" has been defined as "a supply made by....
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....ion, where the Applicant qualifies as an educational institution. 6.19 For the purpose of the Exemption Notification, it is noted that educational institutions have been defined to mean institutions providing services by way of:- a. pre-school education and education up to higher secondary school or equivalent; b. education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force; and c. education as a part of an approved vocational education course. 6.20 From amongst the three categories of educational institutions considered for exemption under the Exemption Notification, the ones providing education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force are relevant in the present case. 6.21 Thus, in order for the Applicant to be considered as an educational institution in terms of the Exemption Notification, they should be (i) providing education as a part of a curriculum, and (ii) the curriculum should be for obtaining a qualification recognised by any existing law. 6.22 In this context, the meaning of the term "qualification" can be unders....
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....authorized, or formally acknowledging the existence, and in the Concise Oxford Dictionary as acknowledging the existence, validity or legality of something. 6.28 Reference is also made to the case of Narsingh Pratap Singh Deo v. State of Orissa AIR 1964 SC 1793, the Honble Supreme Court held that a law generally is a body of rules which have been laid down for determining legal rights and legal obligations, which are recognized by the Courts. Furthermore, in the case of R.S. Nayak v. A.R. Antulay (1984) 2 SCC 183, it was held that the law includes any ordinance, by-law, rule, regulation, notification, custom or usage having the force of law. 6.29 From a perusal of these decisions, it is clear that a qualification recognised by the law refers to any qualification which derives its authorisation from any statute, ordinance, by-law, rule, regulation, notification, custom, usage, and so on. That the completion of the training course is a qualification recognized by the law 6.30 It is humbly submitted that the completion of the ATR extension training course provided by the Applicant is a qualification in terms of the Exemption Notification. The detailed submissions in this r....
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....O to conduct the examination required for the issuance of a license or rating, which shall be conducted by personnel authorized by the DGCA or personnel designated by the ATO in accordance with DGCA approved criteria; d. The ATO will have to maintain detailed trainee records to show that all the requirements of the training programme have been met, as prescribed by the DGCA; e. The DGCA also maintains a comprehensive and effective supervision over the ATO in order to ensure continuing compliance with the approval requirements. 6.37 Reference can also be made to the CAR Section 7, Series B, Part I, dealing with the eligibility criteria for examination for the issue/extension of licenses/ratings, which provides that such an applicant may be required to undergo Ground Training Classes on the aircraft from a DGCA approved training institute in case they are seeking an ATR extension in respect of an aeroplane having AUW more than 5,700 kgs, such as an Airbus A320 or a Boeing 737NG. 6.38 In this regard, it is noted that the ATR extension training can be undertaken either independently through an ATO, or after employment with a scheduled operator/airlines, wherein ....
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....g Training School approved by the DGCA for providing Aircraft Maintenance Engineering ("AME") training and conducting examination as per the course approved by the DGCA. This is a training programme similar in nature and structure to the flying training provided by FTOs, and an analogy can be drawn from the same to the ATR extension training provided by the Applicant. 6.45 The appellant in this case has challenged the Instruction No. 137/132/2010-ST dated 11.05.2011 ("ST Instruction") issued during the Service Tax regime, where it was clarified that the training services provided for obtaining the CPL(A) and other such licenses and ratings form a part of commercial training and coaching, on which Service Tax is imposable. Further, it stated that such training did not qualify under any of the exclusions available to the commercial training and coaching centres, and thereby, it was leviable to Service Tax. 6.46 In this case, it has been noted that at that time, under the Finance Act, 1994, the coaching or training leading to the grant of a certificate or diploma or degree or any educational qualification which is recognized by any law is exempt from the levy of Service Tax. Thi....
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....ircraft repair and maintenance. [Emphasis supplied] 6.48 On the basis of the above observations, it was held that where the DGCA approves the institute providing AME training, and exercises supervision over the same, and the training is conducted as per the syllabus prescribed and the TPM approved by the DGCA, the training provided by such an institute would be exempt from Service Tax, considering the completion of such training at the institute as a qualification recognised by the law. 6.49 In this case, the Delhi High Court held that the certificate/training/ qualification offered by approved training institutes, has been conferred some value in the eyes of law by the Aircraft Act, the Aircraft Rules and the relevant CARs, even if it is only for the purpose of eligibility for obtaining the ultimate license from the DGCA to enable the trainees to become commercial pilots. 6.50 Further, they held that the ST Instruction was based on an incorrect reasoning, and that merely because the qualification awarded by the institute does not allow a person to start certifying the repair, maintenance or airworthiness of an aircraft, and a further license is required to be iss....
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....e said qualification has been made subject to clearing /passing a Bar Exam to be held by the Bar Council of India , the same does not make the qualification of law not recognized by law. The recognition accorded by the Act, Rules and CAR supra to the Course Completion Certificate issued by the Institutes as the petitioner cannot be withered away or ignored merely because the same does not automatically allow the holder of such qualification to certify the repair, maintenance or airworthiness of an aircraft and for which authorization a further examination to be conducted by the DGCA has to be passed/ cleared. [Emphasis supplied] 6.52 On the basis of this reasoning, the Delhi High Court quashed the ST Instruction issued by the CBEC and held that the training services provided by an institute approved by the DGCA would be exempt from the levy of Service Tax. 6.53 The decision of the Delhi High Court has been challenged before the Hon'ble Supreme Court by the Department, and in 2014, the Apex Court imposed a stay on the decision of the High Court till further orders in the order reported at 2014 (2) TMI 1320 SC ORDER. Further, they have admitted the special leave petition in ....
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....ion is subject to meeting the conditions specified at SI. No. 66 of the notification No. 12/ 2017- Central Tax (Rate) dated 28.06.2017. 6.59 In order to understand the reasoning behind this clarification, reference can be made to the Agenda Notes of the 37th GST Council Meeting dated 20.09.2019, wherein the issue of granting GST exemption to the DGS approved courses has been discussed. 6.60 In this discussion, it was noted that the MTIs are authorized to grant training certificates to their students for making them eligible to appear in the competency examination conducted by the DGS to get the Certificate of Competency. Since the MTIs and their training courses are approved by the DGS under the provisions of the Merchant Shipping Act, 1958 read with the Merchant Shipping (Standards of Training, Certification and Watch-keeping for Seafarers) Rules, 2014, and taking into consideration the decision of the Delhi High Court in the case of Indian Institute of Aircraft Engineering (supra), it has been clarified that such courses are exempt from GST. 6.61 From the said discussion in the 37th GST Council Meeting, it is evident that the intention of the GST Council is to exempt the....
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.... discussion with respect to whether the completion of the training courses offered by the applicant will qualify as a qualification recognised by the law and with reference to this definition, it is submitted that the Applicant is an educational institution under the GST law. 6.70 On the basis of our submissions that the completion of the flying training courses provided by the Applicant is in the nature of a qualification recognised by the law, it can be contended that the Applicant is an educational institution, since all the conditions provided in the aforementioned definition has been fulfilled:- a. The training provided by the Applicant is in the nature of education services, b. Such education services are provided as a part of the curriculum prescribed and approved by the DGCA, and c. The completion of the training courses is a qualification recognised by the law. 6.71 On the other hand, without prejudice to the above, if we consider the alternative argument that the endorsement for extension of ATR on the CPL(A) by the DGCA is a qualification recognized by the law, the Applicant still qualifies as an educational institution, since they are pr....
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....ngs and reiterated the facts narrated in their application. FINDINGS & DISCUSSION At the outset we would like to make it clear that the provisions of CGST Act, 2017 and the KGST Act, 2017 are in pari-materia and have the same provisions in like matters and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the KGST Act. 9. We have considered the submissions made by the applicant in their application for advance ruling. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts along with the arguments made by the applicant & the submissions made by their learned representative during the time of hearing. 10. The Applicant, admitting that their activity is provision of Type Rating Training on simulators; they collect fee for the said activity which is consideration; the said activity is a commercial activity and hence the same are in the course or furtherance of business and thus the said activity amounts to supply in terms of Section 7(1)(a....
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....Law Dictionary i.e. "possession by an individual of the qualities, properties, or circumstances, natural or adventitious, which are inherently or legally necessary to render him eligible to fill an office or to perform public duty or office", submitted that in the legal parlance, qualifications do not refer to the mere possession of degrees, diplomas etc., but the possession of skills, accomplishments etc., which have been acquired through training or education and which confer upon a person the ability to undertake a particular profession or pursuit. Further, in the instant case the impugned training program provides the flying experience that is required for applying for an ATR extension in terms of Schedule II to the Aircraft Rules. 14. The Applicant, with regards to the term "recognized by law", submitted that the said term is not defined under the GST Law and thus has to be examined; in the case of Indian Institute of Aircraft Engineering Vs Union of India [2013 (30) STR 689 (Del) it is held that the expression "recognized by law" is a very wide one, as compared to the expression "conferred by law", and even if a certificate /degree /diploma /qualification is not the produc....
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....at an ATO, as required by the Aircraft Rules, i.e. a qualification recognised under the existing law, which has to be further used for applying for the CPL(A) and such other licenses. 17. It is observed from the facts of the case that the applicant undertakes the supply of the ATR extension training services to their trainees as per the agreement. The pilots holding the CPL(A) have to undergo the ATR extension training for the specific type of aircraft(s) so as to fly the said aircraft with the commercial airlines. Thus they approach the applicant either directly on their own or through the airlines with whom they are employed (on stipend basis as trainee or otherwise). The applicant institute is approved by the DGCA to conduct aircraft specific type rating training courses, as per the curriculum approved by the DGCA. The applicant issues a course completion certificate once the type rating training is completed. The pilots have to file an application with the DGCA, for extension of ATR, along with the required documents amongst which the course completion certificate is the one which evidences that the said pilot has undergone the training. Therefore the specific issue of wheth....
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.... training and thus the trainees become qualified to appear for the examination conducted by the DGCA. The DGCA endorses the licences of the trainees who are successful through the said DGCA exam to the effect of type rating of specific aircraft, so as to enable them to pursue their profession as pilot for specific aircrafts. Therefore the applicant contends that the training program confers skills relating to flying specific aircrafts and thus the completion of the said training program itself becomes a qualification. This contention is not acceptable as the DGCA is not endorsing the licences of the trainees, on the basis of course completion certificate issued by the applicant, but conducts separate examination. In fact the course completion certificate doesn't have universal acceptability but is merely a pre-requisite document for submission of the ATR extension application form, prescribed by DGCA, only to show that the required competency has been acquired by the said trainee. Pilots requiring an endorsement in their Licence for permission to fly an aircraft for which they have undergone type rating training are required to fill up this form. The format has the instructions to ....
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....t the DGCA would endorse the type rating of aircraft in the licence of the trainee pilots. Therefore, the course completion certificate issued by the applicant can't said to be a certificate which is recognized by law for the time being in force. The fact that such a certificate may be taken into account by the DGCA approved examiner for the purpose of evaluating the experience and content of training will not make it statutory in character. 27. Now we proceed to examine whether the Type Rating Training by the applicant enables the trainee to seek employment or undertake self employment directly after such training or coaching. If the trainee can seek employment directly after the training then it can be considered that the training of the institute results into a qualification. Further 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. Thus a person can fly an aircraft and consequently seek employment with an Airlines company only after his licence has been endorsed with the aircraft rating for the said aircraft by the DGCA. Mere undergoing training with the applicant without ....