TaxTMI 
TaxTMI 
2023 (3) TMI 1115
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....ype 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 both" which is covered under Sections 97(2)(e) of....
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....ees 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 "AUW"), with the approval of the DGCA, and in accordance with a Train....
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....r 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 be made to the scope of supply defined under Section 7(1) of the CGST Act, wherein it has been provided that all forms of supply of goods or ....
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.... "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 a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply". 6.12 Further under Section 2(90), "p....
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....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 understood from common parlance. In accordance with the Advanced Law Lexicon by P. Ramanatha Aiyar, "qualification" has been defined as "the fitness or capacity of the party for a particular pursuit or profession", whether such capacity is natural or through training. In a different context, the same term has been defined as qualities, accomplishments, etc. which quali....
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.... 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 regard have been made hereunder. 6.31 For the purpose of determining the qualification in this scenario, we have already noted: (i) that the Applicant is providing ATR extension training courses, (ii) that the trainees of the Applicant need to hold a CPL(A) or such similar license before embarking upon the training provided by them, (iii) the stages of training provided in....
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....ive 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 the operator/airlines send their pilots to a ATO for undertaking such training programmes. 6.39 From the above provisions, it is clear that not only is an ATO approved and supervised by the DGCA, but the training that it provides to its trainees also has to be in accordance with the syllabus prescribed by the DGCA, and further approved by the DGCA, as a part of their TPM. 6.40 Further, on reading of the Aircraft Rules in conjunction with the ATO C....
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....struction") 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. This exemption under the Service Tax law is similarly worded to that prescribed under the Exemption Notification under the GST law. 6.47 In the course of arriving at the decision, the High Court has noted the following:- 14. We have wondered, what could be the reason for exempting from payment of service tax those training or coaching centres, even though commercial, whose certificate/degree/diploma/qualification is recognized by law. The only plausible reason, according to us, ....
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....ertificate/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 issued by the DGCA on passing an examination in this regard, it cannot be said that such qualification is not one recognised by the law. 6.51 The following is the relevant extract of the reasoning provided by the High Court:- 25. We are of the view that the Act, the Rules and the CAR, having provided for grant of approval to such institutes and having laid down conditions for grant of such approval and having further provided for relaxation of one gear in the minimum practical training required for taking the DGCA examination, have recognized the Course Comp....
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....CA 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 2017, as reported at 2017 (50) S.T.R. J154 (S.C.). 6.54 It is to be further noted that the Department withdrew the appeal filed before the Supreme Court against the Indian Institute of Aircraft Engineering, due to the low tax effect, as on 19.11.2020, and therefore the stay on the said decision of the Delhi High Court can be considered to have been effectively vacated. 6.55 This decision has been followed by various High Courts in the case of Commissioner of Customs & Central Excise v. MP Flying Club Ltd., 2014 (8) TMI 1182 - MADHYA PRADESH HIGH COURT, and in the case of Commissioner ....
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....icate 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 training course itself, since the course and the completion of the same under the MTIs are recognised by the law. By the same analogy, the said exemption should be applicable on the training programmes conducted by the ATOs, like the Applicant. Alternatively, the completion of the training course is education as a part of a curriculum for obtaining a qualification recognised by the law 6.62 Without prejudice to the above submissions, it is submitted that alternatively, the completion of the flying training course offered by the Applicant is in the nature of education as a part of a curriculum for obtaining....
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....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 providing education as a part of the curriculum prescribed and approved by the DGCA, thereby enabling their trainees to obtain the ATR extension from the DGCA. 6.72 Thus, consequent to following either of the arguments discussed in the foregoing paragraphs, the Applicant qualifies as an educational institution. That the supply is exempt from levy of GST 6.73 Since the Applicant is an educational institution, and on the basis that they are providing services to their trainees, which are in the nature of other education services falling under the ambit of SAC 999294, it is respectfully submitted that such services will be covered under SI. No. 66(a) of t....
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.... 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) of the CGST Act 2017 and the said activity falls under the ambit of definition of "Services" in terms of definition under Section 2(102) of the CGST Act 2017; the impugned services are classifiable under SAC 9992 94 as "Other Education & Training Services n.e.c.", covered under training for flying certificates & ship licences and contends that they qualify to be an Educational Institution and thus their services are exempted in terms of entry No.66(a) of Notification 12/2017-CentralTax (Rate) dated 28.06.2017, as amended. 11. In view of the foregoing, the issue before us to decide is whether the Applicant qualifies to be an educational institution and if so whether they are entitle....
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....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 product of a statute but has approved of some kind in 'law', the same would be exempt; the term 'recognise' is defined, in Black's Law dictionary, as the confirmation of an act done by another person as authorized, or formally acknowledging the existence and in the Concise Oxford Dictionary as acknowledging the existence, validity or legality of something; Honble Supreme Court in the case of Narsingh Pratap Singh Dev Vs State of Orissa AIR 1964 SC 1793 held that a law generally is a body of rules which have been laid down for determining legal rights and legal obligations, which care recognized by the courts; in the case of R S Naik Vs A R Antulay (1984) 2 SCC 183 it was held that the law includes ....
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....s 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 whether the training and course completion certificate issued thereafter amount to a qualification recognized by any law or not has to be decided. 18. We find that in the same facts and on the same issue for the same applicant company, advance ruling AAR/ST/1/2010 dated 4.2.2010 was given in service tax regime. We observe that the law, under which ruling was given, has changed but the facts and issues raised before the subject authority remains the same i.e. whether the services provided by the applicant is part of a curriculum for obtaining a qualification recognized by any law for the time being in force. Thus we intend to borrow certain facts and inferences from the said ruling. 19. It is learnt th....
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....tion. 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 the applicant for filing the application form, which specify the guidelines for filling up each Serial No. of the form and the list of documents which are required to be enclosed with the form and the documents required to be enclosed are to be certified / signed by "approved examiner". The instructions do not require these documents to be certified by the training institutes /establishments. 23. The applicant claimed that undergoing Type Rating Training is mandatory as per Rule 6A of the Aircraft Rules, 1937. However, it is observed that the said rule prohibits a person from flying an aircraft as pilot unless the said aircraft is included or entered in his licence. There is no specific mention of training ....
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.... 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 endorsement of the licence by a competent authority will not enable a pilot to fly an aircraft or seek employment. The training does not directly result into an employment or even enable the trainee to undertake self employment. 28. In view of the foregoing it is very clear that the applicant imparts training to the trainees and thus provides ATR extension services. On completion of the said training the applicant issues course completion certificate, which is a pre-requisite document for preferring application before the DGCA, who conducts the examination through an approved examiner and on passing of the said exam the DGCA records the said ATR extension in the CPL of the pilots concerned. Thus the training of the a....