Case Law Details
In re National Flying Training Institute Private Limited (GST AAR Maharashtra)
In the case of National Flying Training Institute Private Limited, the GST Authority for Advance Rulings (AAR) Maharashtra addressed the taxability of flying training services provided to trainees. The applicant sought clarity on whether these services would be taxable or exempt under GST law. The AAR concluded that the supply of flying training services for completing an approved course for a Commercial Pilot License (Aeroplanes) is exempt from GST. This exemption is provided under Entry No. 66 of Notification No. 12/2017-Central Tax (Rate) dated 28th June 2018. Consequently, the question regarding the applicable GST rate was deemed not applicable due to the exemption status of the services.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, MAHARASHTRA
(under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act” respectively] by M/s. National Flying Training Institute Private Limited, the applicant, seeking an advance ruling in respect of the following questions.
1. Whether the supply of flying training services provided by the Applicant to their trainees will be taxable or exempt under the GST law?
2. If such a supply is taxable, what will be the rate of GST applicable?
At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression ‘GST Act’ would mean CGST Act and MGST Act.
1) FACTS AND CONTENTION-AS PER THE APPLICANT FACTS:
1.1 M/s. National Flying Training Institute Private Limited (hereinafter referred to as “NFTI”), a joint Venture between (Airports Authority of India (‘AAI) and International Flight School (Mauritius) Limited (a group company of CAE Inc, Canada ) is engaged in the business of providing types of lying training services to the trainees aspiring to obtain licenses and ratings from the Directorate General of Civil Aviation (hereinafter referred to as “DGCA”), at its flying training facility located in Gondia Maharashtra.
1.2 These training services are provided in accordance with 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.
1.3 Under Section 5(l)(g) and (o) 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.
1.4 1.4 Further, Section 5A of the Aircraft Act empowers the DGCA to issue directions in respect of the topics covered under Section 5(1). It is understood that Section 5A read with Rule 133 A of the Aircraft Rules have empowered the DGCA to issue the Civil Aviation Requirements (hereinafter referred to as “CARs”).
1.5 On the other hand, Rule 41B 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 Training and Procedure Manual (hereinafter referred to as “TPM”) and a Quality Assurance Manual approved by the DGCA. Copy of the TPM of the Applicant is enclosed.
1.6 Against this background, NFTI is an FTO approved by the DGCA in Gondia, Maharashtra, namely, M/s. National Flying Training Institute Pvt. Ltd. (hereinafter referred to as “Applicant”), where they provide the following stages of training to the cadets for obtaining various licenses and ratings, as per the DGCA approved syllabus and training manual:-
i. Theoretical knowledge training as preparation for the Student Pilot’s License (“SPL’) examination;
ii. Ground theoretical training, in respect of which written examinations are conducted by the DGCA;
iii. Synthetic flight training conducted on a Synthetic Training Device, namely Flight and Navigation Procedures Trainers for SE 15 hours and ME 10 hours;
iv. Flying training in air, wherein the cadets fly a single engine aircraft for 185 hours, and a multi engine aircraft for 15 hours.
Copy of the approval issued to the Applicant to operate as an FTO is enclosed. Copy of the certificate of airworthiness is enclosed.
1.7 After the completion of the entire training course provided by the Applicant, and after successfully passing the DGCA conducted examination, the trainees can submit an application for obtaining their Commercial Pilot’s License /Aeroplane) (hereinafter referred to as “CPL(A)”| before the DGCA, and certain documents have to be submitted along with such application. Some of the documents that have to be so submitted have been enumerated hereunder:-
a. Duly certified log book of the applicant;
b. Duly certified Flying Training Progress Report (hereinafter referred to as “FTPR”) issued by an FTO:
c. Form CA-39 duly certified by the Chief Flying Instructor (CFI) of the said FTO, for the preceding six months and for the preceding 5 years;
d. Duly certified statements in relation to flying training as pilot-in command, and instrument time on simulator and aircrafts;
e. Proforma of flying tests conducted by day and by night.
Sample copies of the documents specified above have been submitted.
1.8 These documents are required to be submitted with the application for the CPL(A) license as evidence of the flying experience of the applicants, as required under sub-section 2 of Section A of Schedule II to the Aircraft Rules Thus, this is a mandatory part of the course for obtaining the licenses and ratings discussed hereinabove. Sample copies of the course completion certificates/graduation certificates issued by the Applicant have been submitted.
1.9 The Applicant was established in 2007 and started providing the above referred training services from September 2008. Since inception, the Applicant has been of the view that the services provided by it to its students/ trainees shall not be subject to Service Tax. However, based on repetitive notices for payment of service tax under the head “Commercial training
2) STATEMENT CONTAINING APPLICANT’S INTERPRETATION OF LAW
2.1) A. “recognized by the law’-
1) The meaning of the term “recognised by law”, which is not defined under the GST law, has to be examined. It has been observed in the case of Indian Institute of Aircraft Engineering v. Union of India, 2013 (30) S.T.R. 689 (Del.) 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 approval of some kind in ‘law’, the same would be exempt.
2) It has also been noted that the term “recognise” is defined in the Black’s Law Dictionary (8th Edition), 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.
3) Reference is also made to the case of Narsingh Pratap Singh Deo v. State of Orissa AIR 1964 SC 1793, the Hon’ble 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 SCC183, it was held that the law includes any ordinance, by law, rule, regulation, notification, custom or usage having the force of law.
4) 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.
2.2) Completion of the training course is a qualification recognized by the Aircraft Laws-
1) It is humbly submitted that the completion of the flying 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.
2) In terms of sub-section 2 of Section A of Schedule II to the Aircraft Rules, it has been provided that flying experience is a mandatory requirement for getting a pilot’s license, and the flying experience required for the issue of Private Pilot’s Licences and Commercial Pilot’s Licences shall be acquired under the supervision of a Flight Instructor and on an aircraft having a valid Certificate of Airworthiness.
3) Further, clauses (c) and (e) of the sub-section 2 provide that such flying experience has to be acquired at an FTO approved/recognised by the DGCA, and has to be completed in accordance with the syllabus prescribed/approved by the DGCA.
4) Thus, it is evident that this portion of the curriculum prescribed by the DGCA has to be acquired at an approved FTO, and since the same is a mandatory requirement for receiving the licenses and ratings covered under the Aircraft Rules, it forms an essential part of the curriculum for completing the prescribed flying training, which is, in turn, essential for applying for the licenses and ratings issued by the DGCA, in terms of the Aircraft Act and Rules.
5) It has also been provided in clause (a) of the said sub-section that the evidence of the flying experience would be the production of a duly certified log book.
6) In this context, reference is made to the CAR issued in terms of Rule 133A of the Aircraft Rules read with the CAR Section 7, Series D, Part I dated 30.01.2015 (hereinafter referred to as “FTO CAR”), which refers to the setting up of and the functioning of all FTOs imparting flying training for obtaining pilot licenses and associated ratings.
7) The FTO C AR provides for the eligibility to become an FTO, the conditions that need to be fulfilled, the process of approval of an FTO by the DGCA, and the supervision of the activities of the FTO by the DGCA.
8) Clause 7 of the CAR provides for the certificate of approval to be issued to an FTO by the DGCA, and that where the DGCA has authorized an FTO to conduct the testing required for the issuance of a licence or rating, such testing shalI be conducted by personnel authorized by the DGCA, i.e. personnel receiving a certificate of designation from the DGCA.
9) It has been further provided in Clause 8 that the FTO needs to prepare a TPM to be approved by the DGCA, which will include the entire training programme of the FTO.
10) The CAR also provides all the requirements that the FTO has to fulfil in the course of providing the training to its trainees, i.e. the adequate facilities, qualified personnel and equipment’s required for training a certain number of trainees.
11) Under Clause 15 of the FTO CAR, it has been provided that the FTO has to keep detailed records for each of its trainees, and this includes the trainee log books maintained in accordance with the Aircraft Rules, for the purposes of recording evidence of flying experience, and an FTPR, both of which have to be submitted along with the application form for CPL(A), in accordance with the Instructions appended thereto.
12) Further, Clause 14.3 provides that the FTO will have to provide its trainees with a certificate of completion on completing its training programme.
13) From the provisions of the FTO CAR, it can be seen that the DGCA exercises a large amount of supervision and control over an FTO in the following ways:-
a. Various eligibility and the conditions have to be fulfilled before the approval of the FTO by the DGCA, and such approval can be withdrawn or be subject to nonrenewal where the FTO does not meet all the requirements under the Aircraft Rules and the FTO CAR;
b. The TPM of the FTO has to be in accordance with the syllabus prescribed under the relevant CARs issued by the DGCA, and have to be submitted for approval by the DGCA;
c. The facilities, equipments and personnel requirements specified under the CAR have to be fulfilled and maintained;
d. The DGCA can inspect the facilities and records of the FTO, conduct surveillance to ensure the continuous meeting of the requirements under the law, carry out audits, etc.;
e. In case of any misrepresentation to the DGCA or where the FTO does not meet the requirements of the Aircraft Act, the Aircraft Rules, the applicable CARs or other regulations issued from time to time, or the standard of flying training is found to be below the desired level, the approval granted to the FTO shall be liable to alteration, suspension or cancellation.
14) Thus, it is submitted that not only is an FTO 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 the FTO’s TPM.
15) Further, on reading of the Aircraft Rules in conjunction with the FTO CAR and the CPL(A) application form, it is clear that the documents issued by the FTO, such as the FTPR and the trainee log book, amongst others, are required for submission along with such application.
16) In light of the above submissions, firstly, it is submitted that the completion of the training programme with the Applicant in accordance with the Aircraft Act, the Aircraft Rules, the FTO CAR and the Applicant’s TPM is in the nature of a qualification recognised by any law for the time being in force”, since,-
(i) the completion of such flying training in accordance with the syllabus prescribed by the DGCA is recognised under the powers granted by the Aircraft Act, the Aircraft Rules and the FTO CAR, i.e. they are recognised by the law, and
(ii) the completion of the flying training and acquiring the requisite flying experience from the FTO are requirements for a person to make an application to obtain a CPL(A), which is required for such person to be employed as a pilot.
17) Secondly, the syllabus prescribed for obtaining a license/rating, under the CAR Section 7, Series B is prescribed by the DGCA for obtaining such licenses and ratings, and the training programme conducted by the Applicant to certify that the training completed is in pursuance of such curriculum prescribed by the DGCA.
18) Thus, it is humbly submitted that the training provided by the Applicant forms education as a part of the curriculum prescribed by the DGCA and the same is provided for the purpose of completing the flying training at an FTO, as required by sub-section 2(c) and (e) of Section A of Schedule II to 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.
2.3) Case laws supporting the Applicants view that -completion of the training course is a qualification recognized by law.
1) In this regard, reference is made to the Service Tax case of Indian Institute of Aircraft Engineering v. Union of India, 2013 (30) S.T.R. 689 (Del), wherein the writ petitioner was an Aircraft Maintenance Engineering 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.
2) 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.
3) 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.
4) 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.
5) 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 year in the minimum practical training required for taking the DGCA examination, have recognized the Course Completion Certificate and the qualification offered by such Institutes. The certificate/training/qualification offered by Institutes which are without approval of DGCA would not confer the benefit of such relaxation. Thus, the certificate/training/qualification offered by approved Institutes, has by the Act, Rules and the CAR been conferred some value in the eyes of law, even if it be only for the purpose of eligibility for obtaining ultimate licence/approval for certifying repair/ maintenance/airworthiness of aircrafts. The Act, Rules and CAR distinguish an approved Institute from an unapproved one and a successful candidate from an approved institute would be entitled to enforce the right, conferred on him by the Act, Rules and CAR, to one-year relaxation against the DGCA in u Court of law. The inference can only be one, that the Course Completion Certificate/training offered by such Institutes is recognized by law.
27. The reasoning in the impugned Instruction dated 11th May, 2011 that because the qualification awarded by the Institute does not culminate in automatic issuance of license/authorization by the DGCA to certify the repair, maintenance or airworthiness of an aircraft and for which purpose a further examination to be conducted by the DGCA is to be taken, in our view mixes up and confuses, qualification with a license to practice on the basis of that qualification. An educational qualification recognized by law will not cease to be recognized by law merely because for practicing in the field to which the qualification relates, a further examination held by a body regulating that field of practice is to be taken. Immediate instance can be given of the qualification in the field of law. Though by amendment of the recent years, the right to practice law on the basis of the 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) 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.
7) 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.).
8) 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.
9) 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 of Central Excise, Customs & Service Tax v. Garg Aviations Ltd., 2014 (35) S.T.R. 441 (All.).
10) In the latter case, the appellant was providing both flying training and AME training, and the Allahabad High Court has followed the reasoning in Indian Institute of Aircraft Engineering (supra) and held that such training services would not be leviable to Service Tax.
11) In the latter case the appellant was providing both flying training and AME training, and the Allahabad High Court has followed the reasoning in Indian Institute of Aircraft Engineering (supra) and held that such training services would not be leviable to Service Tax.
12) Applying the ratio and reasoning of the Delhi High Court in the case of Indian Institute of Aircraft Engineering (supra), as well as of the Allahabad High Court in the case of Garg Aviations (supra), it can be said that the completing the training programme offered by the Applicant will, in itself, be considered as a qualification recognised under the law, and therefore, no GST would be chargeable on such training services provided.
2.4) Applicability of Circular No 117/36/2019-GST-
1) In the context of the GST law, reference can also be made to the Circular No. 117/36/2019-GST dated 11.10.2019, which deals with the applicability of the GST exemption under SI. No. 66(a) of the Exemption Notification to the Directorate General of Shipping (hereinafter referred to as “DGS”) approved maritime courses conducted by the Maritime Training Institutes (hereinafter referred to as.
“MTIs”) of India. The relevant extract from the said Circular is as follows:-
6. From the above discussion, it is seen that the Maritime Training Institutes and their training courses are approved by the Director General of Shipping which are duly recognised 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. Therefore, the Maritime Institutes are educational institutions under GST Low and the courses conducted by them are exempt from levy of GST. The exemption is subject to meeting the conditions specified at SI. No. 66 of the notification No. 12/2017- Central Tax (Rote) dated 28.06.2017.
2) 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.
3) 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 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 FTOs, 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
4) 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 a qualification recognized by the existing law, i.e. the CPL(A) issued by the DGCA.
5) In this regard, reference can be made to the ST Instruction, which clarified that the licenses issued by the DGCA are in the nature of qualifications recognised by the law.
6) Further reference can be made to the case of Academy of Maritime Education and Training Trust v. Commissioner of Service Tax, 2014 (36) S.T.R. 1216 (Mad.), wherein the Madras High Court has relied upon the decision of the CESTAT in Bombay Flying Club v. Commissioner of Service Tax, Mumbai, 2013 (29) S.T R. 256 (Tri. – Mumbai), where the Tribunal held that the license issued by the DGCA is a qualification recognised by the law.
7) On the basis of the decision in Bombay Flying Club (supra), it was held by the Madras High Court that the same principle will apply in case of courses provided by Mils approved by the DGS.
8) In light of this decision of the ST Instruction and the said Madras High Court, it is submitted that where the DGCA-issued license is considered to be a qualification recognised by the law, the training imparted by the FTOs is a part of the curriculum prescribed by the DGCA for obtaining the said qualification.
9) The Exemption Notification further proceeds with defining what is an educational institution under Section 2(y) of the Exemption Notification. Relevant extracts of the same are herewith reproduced as under-
“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;”
…Emphasis Supplied
10) The Applicant qualifies under point (ii) of the above definition of educational institution as it is fulfilling the conditions and the same is discussed as under-
a. Services provided by way of education as a part of a curriculum-The Applicant is providing services of training to the trainees as per the course module which is duly approved by the DGCA. Hence, the same is falling under a part of the curriculum.
b. For obtaining a qualification recognised by law – 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. Furthermore, 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.
In the present case, it is submitted that the qualification being referred to is the completion of the training programme at the Applicant, where the flying experience required for applying for a CPL in terms of Section J of Schedule II to the Aircraft Rules, 1937 is acquired. The same is mandatory for the trainees to qualify for appearing for the examination conducted by the DGCA and apply for a license, enabling them to pursue their profession as a pilot.
Further, clauses (c) and (e) of the sub-section 2 provide that such flying experience has to be acquired at an FTO approved/recognised by the DGCA and has to be completed in accordance with the syllabus prescribed/approved by the DGCA. Reason being that such a training 5 programme is a qualification in legal terms is because it confers skills relating to flying aircrafts on the prospective pilots. Hence, the main purpose of the course is nothing but to obtain the CPL which is duly recognised by the law.
Hence, in view of the submissions made above, the Applicant indeed falls under the definition of educational institution.
2.5) Submission on applicability of Advance Ruling of other State Authorities in similar cases
The present facts of the case are distinct from the facts disputed in Re: M/s CAE Simulation Training Pvt. Ltd., 2023 (8) TMI 969- Appellate Authority for Advance Ruling, Uttar Pradesh (‘UP AAAR’) and in Re: CAE Flight Training (India) Pvt. Ltd., 2023 (3) TMI 1115- Authority for Advance Rulings, Karnataka (‘Karnataka AAR’). Hence, the said rulings are not applicable.-
1. It is submitted that the rulings of the Hon’ble Appellate Authority for Advance Ruling in UP AAAR and of the Hon’ble Authority for Advance Rulings in Karnataka AAR cannot be made applicable since the facts of the present case are distinct from the facts of the aforementioned rulings.
2. The UP AAAR Ruling dealt with case of extension of Aircraft Type Rating to such independent pilots who were already holding the respective Commercial Pilot License. Such training is provided to the pilots on a simulator so as to allow them to fly a specific type of aircraft. Relevant extracts of the said UP AAAR ruling are herewith extracted as under-
3. Additionally, the Division Bench of the Hon’ble Bombay High Court has decided in favour of the Applicant itself with the factual background and the legal question remaining the same. The Hon’ble Bombay High Court has itself agreed with the judgment of the Hon’ble Delhi High Court by relying on the same extracts reproduced above and relevant extracts from the judgment of the Hon’ble Bombay High Court is reproduced as under-
“It is submitted that the matter in dispute has already been settled by the High Court judgments. The Hon’ble Authority is bound by the High Court judgments since they have decided on the same legal question.”
4) The matter in dispute has already been settled by the High Court judgments. It is a well-settled position of law that the law declared by the higher forums is binding on its subordinate courts and all persons whether or not they were party to the matter in which the said law was declared. To this regard, reference is made to the judgment of the Hon’ble Supreme Court in D. Navinchandra & Co., Bombay and Another Etc. v. Union of India and Others, 1987 29 ELT 492 ; Hon’ble Supreme Court in the matter of Shenoy & Co. v. Commercial Tax Officer, Circle II, Bangalore and Other, 1985 60 STC 70 (SC) wherein a similar precedent was laid down, case of Union of India v. Kamlakshi Finance Corporation Ltd. 1991 (55) ELT 433 (SC).
5) The Applicant submits that the ratio laid down in the abovementioned High Court judgments is the main aspect that is required to be considered. The ratio decidendi in both the judgments is that the training services provided for obtaining a CPL are indeed recognised by law and hence, the assessee is indeed an educational institution. Therefore, the UP AAAR and Karnataka AAR, being per incuriam to the High Court Judgments, cannot be made applicable in the present case
6) In view of the submissions made above, the Applicant submits that the services provided by the applicant are covered under the Exemption Notification and are exempt from GST. The applicant is indeed an educational institution, and its services are falling under the Heading 9992, more specifically under SAC 999294.
3) SUBMISSION BY THE JURISDICTIONAL OFFICER.
1. Applicant’s contention that the issue already stands settled in view of High Court Judgement in the case of Indian Institute of Aircraft Engineering vs Union of India is not acceptable as the department had preferred an appeal in the Apex Court against the said decision of the High Court of Delhi vide SLP(C) No.6083/2014. It is further submitted that in a similar case on the same issue, Civil Appeal No.3898 of 2017 (Commissioner Customs and CE, Indore Vs M.P. Flying Club Ltd) filed by the department against the Order passed by the Hon’ble High Court of Madhya Pradesh, Indore is still pending at the Apex Court. The issue being sub-judice, precedence of the High Court judgement cited by the Applicant cannot be considered as binding on lower courts. On this aspect it appears that the decisions of other Advance Ruling Authorities must be relied upon while deciding this matter.
2. It is to submit that similarity cannot be drawn between the courses provided by the Maritime Training Institute approved by the Directorate General of Shipping which are exempted vide Circular No. 117/36/2019-GST, dated 11-10-2019 issued by TRU and the course provided by the applicant. In this regard observations of the Appellate Authority for Advance Ruling under GST. Uttar Pradesh in appeal Order No. 07/AAAR/31/05/2023, dated 31-5-2023 may be referred to wherein it has been observed that “the Maritime Training Institutes and their training courses are approved by the Director General of Shipping and are recognized 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 thus the said institutes are educational institutions. It is observed that the said institutes are empowered to impart training and certification of the said training in terms of Merchant Shipping Act, 1958 read with relevant Rules supra, whereas in the instant case the Aircraft Act and the Aircraft rules did not approve the appellant as an institute for conduct of examination that yields to or results into a qualification, but only to issue course completion certificate which is useful only as one of the enclosure to file the application for the Type Rating Examination conducted by the DGCA.” The applicant’s submission in para A.10(b) confirms this stand.
3. The issue of applicability of GST exemption to the Directorate General of Shipping approved maritime courses conducted by the Maritime Training Institutes of India has been issued with reference to representations received by the GST Council. GST Council being the appropriate authority to decide the issue. It is therefore more appropriate if the applicants approach the GST Council for issuance of necessary clarification regarding applicability of exemption in respect of courses conducted in the case of flying training institutes also.
4) HEARING
Preliminary hearing in the matter was held on 09.05.2024 Mr. /Aditya Vikram Jain, C.A. appeared, and requested for admission of the application. Jurisdictional Officer Mr. Bhusari, Superintendent, Division-Bhandara, Comme-Nagpur also appeared.
The application was admitted and called for final hearing on 05.06.2024. Mr. Aditya Vikram Jain, C.A., authorized Representative, appeared made oral and written submissions. Jurisdictional Officer Mr. Mukul patil appeared. We heard both the sides.
5) OBSERVATIONS AND FINDINGS:
5.1) Uncontroverted facts of the case and applicable provisions of the Aircraft Act, 1937 and Rules & Civil Aviation Requirements issued under the Aircraft Act,1937 are stated as under-
1) M/s. National Flying Training Institute Private Limited, (hereinafter referred as “Applicant”), is engaged in the business of providing various types of flying training services to the trainees aspiring to obtain licenses and ratings. Its flying training facility located in Gondia, Maharashtra.
2) “Flying Training Services are covered under Head 9992- Education services, sub-heading 9992-94-Other education and training services not elsewhere covered, (ii) training for flying Certificate and ship licenses.
3) For the Airline Industry, the Directorate General of Civil Aviation (hereinafter referred to as “DGCA”), is the regulator and responsible for carrying out safety oversight and regulatory functions, created under section 4A of the Aircraft Act, 1937.
4) Flying Training Institute / Organisation (hereinafter referred as “FTI/ FTP”) of the applicant is approved by the DGCA, under provisions of Rule 41B (4) of the Aircraft Rules, 1937 for “conducting flying training courses specified for Aeroplanes Upto PPL, CPL, IR, AFIR, FIR and extension of Aircraft ratings, single / multiple engines”, vide Certificate FTP No. 20/2016 dated 02-05-2016, and is valid till date. Here “CPL” means ‘ Commercial Pilot Licence (Aeroplane).”. Refer CAR-Section 7- Flight Crew Standards Training and Licensing,Series D- Training Organisation, Part I Issue -II- dated 30 January 2015. Clause 7- 7. Certificate of Approval
5) Applicant has raised question related only to “conducting flying training courses specified for Aeroplanes- for Commercial Pilot License (CPL) of Aircraft ratings, single / multiple engines”. Hence further findings and discussions are limited to the extent of Flying Training course for Commercial Pilot License (Aeroplanes)only.
6) Curriculum of the Course is approved by the DGCA vide FTP Approval 20/2016, and is valid till date. Rule 41 B (3), 133A and Civil Aviation Requirements (CAR)-Flight Crew Standards training and Licenses-, Series B, Part VII, – Subject: Flying training syllabus for grant of pilot’s licences and ratings. Clause 2 . FLYING TRAINING SYLLABUS 2.5 Commercial Pilot Licence (Aeroplane). Refer CAR-Section 7- Flight Crew Standards Training and Licensing, Series D- Training Organisation, Part I- Issue -II- dated 30 January 2015. Clause 8. 8. Training and Procedures Manual.
7) Schedule I! Sect ion A- Gene al framed under rule 7 of Aircraft Rules, 1937, regulates Educational Qualification, Flying Experience, Air Aviation Experience flying tests, etc. Sub-rule Aircraft personnel qualifications- Entry 2- provides for flying experience. Also refer- Section J- Commercial Pilot Licence (Aeroplane). Clause 1 (f).
8) After completion of training, the trainees have to pass prescribed Flying tests, which are conducted by only by examiner approved by the DGCA. Applicant has submitted, a sample of the approval of examiner for its Institute vide- Certificate of DGCA delegated Authority as CFI/ Dy CFI and designated examiner vide file No DGCA-.16021/ 16/ 202C dated 25-062021. Refer Para- 6- Flying tests of Schedule II- Aircraft Personnel.
9) Applicant issues certificate to students who have completed the training and cleared the examination conducted by approved examiner, which states that ” —- has successfully completed COMMERCIAL PILOT LICENCSE-AEROPLANE with MULTIENGINE INSTRUMENT RATING (MEIR) course as prescribed by DGCA under the Aircraft Rules, 1937, on date —- from National Flying Training Institute, Gondia”.
10) Format of the Course Completion Certificate is issued as per – CAR-Section 7- Flight Crew Standards Training and Licensing, Series D- Training Organisation, Part I- Issue -II- dated 30 January 2015. Clause 14.3 Completion Certificate. Sub-clause-14. 3..1 An FTO shall issue a completion certificate to each student who completes its approved course of training. Sub-clause 14.3.2 The completion certificate must be issued to the student upon completion of the course of training and contain at least the following information
11) Course Completion Certificate issued by Applicant is not license granted to Pilot to fly an aeroplane, but is one of the mandatory requirement of the Licensing Examination conducted by DGCA. Refer Schedule II -Aircraft Personnel, Section J- Commercial Pilot Licence (Aeroplane).
12) Commercial Pilot License (Aeroplanes) is granted under Rule 38 by the Central Government, which is Licensing Authority. License is granted only after the candidate has cleared checks, tests and Examinations conducted by DGCA as per provisions of Rule 41A.
5.2) Findings, applicable provisions of Law and discussion on the applicability of the Judgment of Hon’ble Bombay High Court
5.2.1) Provisions of Service Tax era – as explained by CBEC & Hon’ble Delhi & Bombay High Court.
(1) Provisions of the then Service tax era under The Finance Act, 1994. (As applicable wef 01.05-2011).
65(26) ‘commercial training or coaching’ means any training or coaching provided by a commercial training or coaching centred
(2) ‘Commercial training or coaching centre’ has been defined in section 65(27) of the Finance Act and the said section, as it stood prior to 30.04.2011, is as follows :
“65(27) ‘commercial training or coaching centre’ means any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field other than the sports,, with or without issuance of a certificate and includes coaching or tutorial classes but does not include preschool coaching and training centre or any institute or establishment which issues any certificate or diploma or degree or degree or any educational qualification recognised by law for the time being in force. “
It was amended w.e.f. 01.05.2011 and the amended definition is as follows:
“65(27) “Commercial training or coaching centre” means any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field other than the sports, with or without issuance of a certificate and includes coaching or tutorial classes.”
(3) Section 65(105)(zzc) of the Finance Act, which defines “taxable service” is reproduced below:
“65(105)(zzc) “taxable service” means any service provided or to be provided to any person, by a commercial training or coaching centre in relation to commercial training or coaching. Explanation. – For the removal of doubts, it is hereby declared that the expression “commercial training or coaching centre” occurring in this sub-clause and in clauses (26), (27) and (90a) shall include any centre or institute, by whatever name called, where training or coaching is imparted for consideration, whether or not such centre or institute is registered as a trust or a society or similar other organisation under any law for the time being in force and carrying on its activity with or without profit motive and the expression “commercial training or coaching” shall be construed accordingly.”
4) Exemption Notification No.33/2011 – Service Tax dated 25th April, 2011-(Wef 01-05-2011)
G.S.R. (E) – In exercise of the power conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government on being satisfied that it is necessary in the public interest so to do, hereby exempt,-
(i) any preschool coaching and training;
(ii) any coaching or training leading to grant of a certificate or diploma or degree or any educational qualification which is recognised by any law for the time being in force; when provided by any commercial coaching or training centre from the whole of the service tax leviable thereon under section 66 of the Finance Act, 1994.
5.2.2) Provisions of Service Tax era – as explained by CBEC Instructions.- Instructions were issued by the Department vide LETTER F. NO. 137/132/2010-SERVICE TAX, DATED 11-5-2011-To explain the aforesaid provisions with respect to the Flying Training Institutes providing training for obtaining Commercial Pilot Licence etc, , relevant portions are reproduced for ready reference,
Representations have been received seeking clarification regarding leviability of service tax on the Flying Training Institutes providing training for obtaining Commercial Pilot Licence (CPL) and on Aircraft Engineering Institutes for obtaining Basic Aircraft Maintenance Engineer Licence (BAMEL).
2. The matter has been examined. The following observations are pertinent
2.1 The flying institutes/academies are approved by the DGCA and in fact figure in the website of the DGCA as well. But that does not automatically translate into the courses being conducted by them getting the status of ‘recognized by law’, since for that to happen, there has to be a statutory backing which is not the case here The fact that the training imparted by the academies is taken into consideration by the DGCA does not make the course certificate statutory in nature.
2.2 The procedure for granting of a CPL (Commercial Pilot License) entails clearing of an exam that is conducted by the CEO (Central Examination Authority) of the DGCA. The test has a proper syllabus that is laid down In the DGCA website. The license is granted as per Aircraft. Act, 1934 read with Aircraft Rules. Rule 38 of the Rules, lay down the Licensing Authority for granting of the licenses shall be the Central Govt. Thus, there is no statutory recognition of the course being provided by the flying academies.
3. Thus, the course certificates given by these academies cannot be held as “recognized in law” for the purposes of service tax exemption unless and until the course per se is specifically recognized by law which is not so in the current case. It may be added that there are several judicial pronouncements that lay down that the specific wording of law have to be interpreted strictly. Thus, the term ”recognized by law” has to construe (sic.) a direct nexus only between the degree/certificate being awarded by the Coaching centre and the statute. Accordingly, the said institutes/academies would clearly come in the category of coaching centres as laid out in the pre-amended section 65(27) of the Finance Act ibid (prior to Budget 2011) and therefore would be taxable.
It is submitted by the applicant that based on these instructions, adjudication order was passed in its case under Service Tax and had challenged the same before Hon’ble Bombay High Court, Nagpur Bench, through Writ Petition No 5303/2014, which is decided on 31 October, 2023.
5.2.3) Provisions of Service Tax era – as explained by CBEC Instructions.-
Observations & judgment of the Hon’ble Bombay High Court, Nagpur Bench in Applicants own cases in National Flying Training Institute Private Limited V. CBEC, 2023 (12) TMI439 (Bom.) are as under,
The challenge raised in this writ petition is to the Instruction dated 11.05.2011 issued by the Director, Service Tax under the Ministry of Finance through its Department of Revenue holding that the Course Certificate being issued by Fiying Training Institutes cannot be held as “recognized in law” for the purposes of exemption from paying service tax. A challenge is also raised to the show cause notice dated 18/21 10.2013 that has been issued by the Commissioner, Central Excise, Custom and Service Tax Commissionerate, Nagpur requiring the petitioner-M/s National Flying Training Institute Private Limited to show cause why the petitioner should not be classified under the taxable category of Commercial Coaching or Training Centre as defined by Sections 65(26) and (27) of the Finance Act, 1994. Consequentially, service tax for the period from September-2008 to June-2012 has been demanded from the petitioner.
In Para 5- It quoted with approval decision of Delhi High Court in case of Indian Institute Aircraft Engineering in Writ Petition (C) No. 3513 of 2012 decided on 21.05.2013
“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 year in the minimum practical training required for taking the DGCA examination, have recognized the Course Completion Certificate and the qualification offered by such Institutes.”
“’27. The reasoning in the impugned Ins’ ruction dated 11.5.2011 that because the qualification awarded by the Institute does not culminate in automatic issuance of license/ authorization by the DGCA to certify the repair, maintenance or airworthiness of an aircraft and for which purpose a further examination to be conducted by the DGCA is to be taken, in our view mixes up and confuses, qualification with a license to practice on the basis of that qualification. An educational qualification recognized by law will not cease to be recognized by law merely because for practicing in the field to which the qualification relates, a further examination held by a body regulating that field of practice as to be taken. Immediate instance can be given of the qualification in the field of law/
We are in complete agreement with what has been held by the Delhi High Court and we do not find any reason whatsoever to take a different view of the said provisions.
2 For aforesaid reasons, we are satisfied that the petitioner has made out a case for grant of relief. Accordingly, it is held that Instruction dated 11.05.2011 cannot be made applicable to the facts of the present case. Hence the show cause notice dated 18/21.10.2013 and the order dated 24.12.2014 passed on that basis are set aside. Consequentially the petitioner would be entitled to refund of the amounts of service Tax as paid under protest pursuant to the show cause notice dated 18/21.10.2013 in accordance with law”.
5.2.4) Provisions of Exemption in GST Regime.-
a. The applicant is claiming that it being Educational Institute for purposes of Entry at Sr. no 66 of the Notification 12/2017- Central tax (Rate)- dated 28th June 2017 are reproduced as under,
Table
| SL. No. | Chapter, Section, Heading, Group or Service Code (Tariff) | Description of Services | Rate (percent.) | Condition |
| (1) | (2) | (3) | (4) | (5) |
| 66 | Heading 9992 or Heading 9963] | Services provided –
(a) by an educational institution to its students, faculty and staff; [……………… |
Nil | Nil |
b. Definitions. – For the purposes of this notification, unless the context otherwise requires,
(v) “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.
5.2.5) Submission of the Jurisdictional Officer- on applicability of Judgment of Hon’ble Bombay High Court.-
i) The judgment of Bombay High Court is under Service Tax regime and hence not applicable.
ii) Department has decided to file Special Leave Petition against the aforesaid decision. Matter being sub-judice, shall not be followed
iii) Argument of the applicant that the issue already stands settled in view of High Court Judgement in the case of Indian Institute of Aircraft Engineering vs Union of India is not acceptable as the department had preferred an appeal in the Apex Court against the said decision of the High Court of Delhi vide SLP(C) No.6083/2014. It is further submitted that in a similar case on the same issue, Civil Appeal No.3898 of 2017 (Commissioner Customs and CE, Indore Vs M.P. Flying Club Ltd) filed by the department against the Order passed by the Hon’ble High Court of Madhya Pradesh, Indore is still pending at the Apex Court. The issue being sub-judice, precedence of the High Court judgement cited by the Applicant cannot be considered as binding on lower courts. On this aspect it appears that the decisions of other Advance Ruling Authorities must be relied upon while deciding this matter
5.2.6) Findings, discussion & decision on applicability of Judgment of Hon’ble Bombay High Court-
A) Provisions of exemption in Service Tax were-
(i) pre-school education and education up to higher secondary school or equivalent;
(ii) any coaching or training leading to grant of a certificate or diploma or degree or any Educational qualification which is recognised by any law for the time being in force;
when provided by any commercial coaching or training centre from the whole of the service tax leviable thereon under section 66 of the Finance Act, 1994.
B) Provision in GST Regime are
(ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;
Discussion-(a) Both the provisions are pari materia, except the words “as a part of a. curriculum”- AND “for obtaining”. – Thus exemption granted under GST regime has one extra condition of “as a part of a curriculum” than the service tax regime. However, the earlier condition of “leading to grant of a certificate or diploma or degree or any educational qualification which” is now “for obtaining a qualification” under GST regime. In sum and substance there is no substantial change in definition. The basis content of “Education”, leading to grant of qualification, and “Qualification recognised by any law” are same. Only one extra condition of “as a part of curriculum “is incorporated in GST regime.
In Service tax regime – words used are “leading to grant of “a certificate or diploma or degree or any educational qualification”, whereas in & GST Regime words used are “for obtaining a qualification “. Use of words “leading to” and “for obtaining”- clearly point that “something further is / may be required for obtaining a qualification”
Applicant being a Approved Flying Training with approved curriculum” fulfills the additional conditions laid down under GST regime in Clause (ii) of the definition of Educational institute. The Course completion Certificate issued by the Applicant is also recognised by Rule 41A, 41B , Schedule II- Section A- General & Sectio J- Section J- Commercial Pilot’s Licence (Aeroplanes) -Sub-clause 1 (f) And Civil Aviation Requirement (CAR)-Section 7- Flight Crew Standards Training and Licensing, Series D Training Organisation, Part I- Issue -II- dated 30 January 2015. Clause 14.3 Completion Certificate
Sub-clause-14. 3..1 An FTO shall issue a completion certificate to each student who completes its approved course of training.
Sub-clause -14.3.2 The completion certificate must be issued to the student upon completion of the course of training and contain at least the following information
The submission of the jurisdictional officer is not acceptable on following Rules in Interpretation of law and binding precedents.
(i) The provisions of service tax as applicable and discussed in Bombay High Court Judgment and those of GST era are Pari Materia and hence interpretation of the provision under Service Tax regime are applicable to GST era provisions as the statutes and provisions under interpretation are pari materia.
Please refer following judgments, on which the decision is based
Hon’ble Supreme Court in case of the Commercial Tax Officer And Anr. vs Mohan Breweries And Distilleries, in CIVIL APPEAL NO. 7164 OF 2013 decided on 29 June, 2020, has in para discussed applicability of precedents where statutes & provisions of law are pari materia, it has held that,
“26. Before proceeding further, we may usefully refer to the well recognised doctrine of “pari materia” whereby and whereunder, reference to the decisions dealing with other statutes on the same subject is regarded as a permissible aid to the construction of provisions in a statute. Suffice would be, in this regard, to refer to the decision in Ahmedabad (P) Primary Teachers’ Assn. v. Administrative Officer: (2004) 1 SCC 755 wherein this Court applied the doctrine of “pari materia” with reference to the relevant observations in Principles of Statutory Interpretation by Justice G.P. Singh as follows (at page 760 of SCC):-
“12….On the doctrine of “pari materia”, reference to other statutes dealing with the same subject or forming part of the same system is a permissible aid to the construction of provisions in a statute. See the following observations contained in Principles of Statutory Interpretation by G.P Singh (8th Edn.), Syn. 4, at pp. 235 to 239:
“Statutes in pari materia It has aIready been seen that a statute must be read as a whole as words are to be understood in their context. Extension of this rule of context permits reference to other statutes in pari materia i.e. statutes dealing with the same subject matter or forming cart of the same system. Viscount Simonds in a passage already noticed conceived it to be a right and duty to construe every word of a statute in its context and he used the word context in its widest sense including ‘other statutes in pari materia’. As stated by Lord Mansfield ‘where there are different statutes in pari materia though made at different times, or even expired and not referring to each other, they shall be taken and construed together, as one system and as explanatory of each other’. (Emphasis supplied)
b. Decision on applicability of judgment of Hon’ble Bombay High court supra-
We have gone through the facts stated in the judgment in applicants own case in service Tax era and facts in this advance ruling Application, and have come to the conclusion that the facts are same, mand provisions applicable being pari materia, the ratio decidendi of the Bombay High Court is applicable and binding on us till it is stayed or set side by Hon Supreme Court till date department has not filed Special Leave Petition.
Please refer following judgments, on which the decision is based
(a) Operation of any judgement or order of higher Authority or court is binding as per judgment of Hon’ble Supreme Court in case of Ghaziabad Development Authority vs Balbir Singh, in appeal (civil) No. 7173 of 2002 decided on 17 March, 2004, in last three lines of last para of the judgment has held as under,
“We therefore clarify that unless there is a stay obtained from a higher forum, the mere fact of filing of an Appeal/Revision will not entitle the authority to not comply with the Order of the Forum. Even though the authority. may have filed an Appeal/Revision, if no stay is obtained or if stay is refused, the Order must be complied with. In such cases the higher forum should, before entertaining the Appeal/Revision, ensure that the Order is first complied with.”
(b) Similar judgments referred are Hon’ble Bombay High Court in case of Commissioner Of Income-Tax vs Thana Electricity Supply Ltd. on 22 April, 1993, Equivalent citations: (1994]206ITR727(BOM) AND
(c) Hon’ble Bombay High Court in the case of Century Rayon v, Union of India – 2002 (142) ELT 319 Bom wherein the Court held that ‘the judgement rendered by the High Court interpreting a central statute is binding on the authorities created under the Act even if it is a non-jurisdictional High Court unless there is a differing view of the jurisdictional High Court or Supreme Court.’
In view of this we have no hesitation in holding that the applicant is education institute for the purpose entry no. 66 of Notification No 12/2017-Central Tax (Rate) dated 28-06-2017.
5.3) Submission of Applicant- It is argued that Circular No. 117/36/2019-GST dated- 11-10-2019-is applicable in principle to the Applicant also.
5.3.1) Findings, provisions of Law and discussion on Merchant Shipping Act, 1958 & Rules framed thereunder and similar provisions of The Aircraft Act, 1937 and Aircraft rules, 1937 and various Civil Aviation Requirements issued thereunder as discussed in the Circular are in brief as under,
Subject: Clarification on applicability of GST exemption to the DG Shipping approved maritime courses conducted by Maritime Training Institutes of India – reg.
A representation has been received regarding applicability of GST exemption to the Directorate General of Shipping approved maritime courses conducted by the Maritime Training Institutes of India. The same has been examined and following is clarified
5. In order to streamline and monitor the maritime education and trainings by maritime institutes and to administer the assessment agencies, the Merchant Shipping (standards of training, certification and watch-keeping for Seafarers) Rules, 2014 has been notified. Under Rule 9 of the said Rules, the Director General of Shipping is empowered to designate assessment centres. Further the provisions of sub- rules (6), (7) and (8) of the Rule 4 of the said Rules, empowers the Director General of Shipping, to approve (i) the training course, (ii) training, examination and assessment programme, and (iii) approved training institute etc.
6. From the above discussion it is seen that the Maritime Training Institutes and their training courses are approved by the Director General of Shipping which are duly recognised under the provisions of the Merchant Ship ping Act, 1958 read with the Merchant Shipping (standards of training, certification and watch-keeping for Seafarers) Rules, 2014. Therefore, the Maritime Institutes are educational institutions under GST Law and the courses conducted by them are exempt from levy of GST, The exemption is subject to meeting the conditions specified at SI. No. 66 of the notification No. 12/ 2017- Central Tax (Rate) dated 28.06.2017.
5.3.2) Part-B) Our view- From the wording of the Circular-
It is clear that, it has laid down the conditions based on which institute can be said to be ‘Education institute- an institution providing services by way of,-” and “education as a part of a curriculum for obtaining a qualification recognised by any aw for the time being in force” be said to be recognized by law”. Nowhere it is mentioned in this circular that “Maritime Training Institutes” are also “conducting licensing examination” and are approved as “assessment Centres”.
5.3.3) Relevant provisions of Merchant Shipping Act, 1958 and the – and MERCHANT SHIPPING (STANDARDS OF TRAINING, CERTIFICATION AND WATCH-KEEPING FOR SEAFARERS) RULES, 2014 are reproduced for ready reference.
Merchant Shipping Act, 1958
a) Section 76. Certificates of competency to be held by officers of ships.–(l) Every Indian ship, when going to sea from any port or place, shall be provided with officers duly certificated under this Act in accordance with such manning scales as may be prescribed:
b) Section 78. Grades of certificates of competency, (1) Certificates of competency shall be granted in accordance with the provisions of this Act for each of the following grades, namely:-
c) Section 73- Examination for, and grant of certificate.
(1) The Central Government or a pe son duly authorised by it in this behalf shall appoint persons for the purpose of examining the qualifications of persons desirous of obtaining certificate of competency under section 78.
(2) The Central Government or such authorised person shall grant to every applicant, who is duly reported by the ex miners to have passed the examination satisfactorily and to have given satisfactory evidence of his sobriety, experience and ability and general good conduct on board ship, such a certificate of competency as the case requires:
MERCHANT SHIPPING (STANDARDS OF TRAINING, CERTIFICATION AND WATCH-KEEPING FOR SEAFARERS) RULES, 2014.
4. Definitions.- In these rules, unless the context otherwise requires,-
d) Rule 4 (6) “Approved training course” means a course approved by the Director General of Shipping conducted in a training institute for the purpose of issuance of certificate of competency, certificate of proficiency, endorsement, upgradation and revalidation;
e) Rule 4 (7) “Approved training, examination and assessment programme” means the programme of training and assessment of seafarers as approved by the Director General of Shipping specifying the complete scheme of training and standards including examination and assessments for the purpose of issuance of certificates or endorsements under these rules;
f) Rule 4 (8) “Approved training institute” means a training institute approved by the Director General of Shipping;
g) Rule 4 (9) “Assessment Centre” means a centre designated by the Director General of Shipping responsible for assessment of candidates and maintaining records for the purposes of assessment;
h) Rule 9. Training and assessment.- (1) The Director General of Shipping shall designate assessment centres which shall,- (a) assess and maintain records of candidates with regard to their sea-going service, ashore and on board training, courses attended, examinations and assessments completed and certificates helc by the seafarers; (b) examine the documentary evidence that the candidate has fulfilled the eligibility criteria for joining an approved training and assessment programme; and
5.3.4) Similar provisions are incorporated in the Aircraft Act, 1937 & Aircraft Rules, 1937& its schedules and Civil Aviation requirements issued under rule 133B of the Aircraft Rules.
a) Section 76. Certificates of competency to be held by officers of ships.- Related Aircraft rules are, Rule 6. “Licensing of personnel Every aircraft shall carry and be operated by the personnel prescribed in Part v and such personnel shall be licensed in the manner prescribed in that part and in Schedule II:….” Rule- 111.” Proof of competency- (1) An applicant for grant and renewal of any licence and ratings shall produce proof of having acquired the competency and having passed satisfactorily the tests and examinations specified in Schedule III in respect of the licence or rating.”
b) Section 78. Grades of certificate of competency.- Related Aircraft rules are,
Rule- 4. “Aircraft Rating- The licence shall indicate the class and the types of aeroplanes or helicopters or gliders the holder is entitled to fly. Only those types of aircraft may be entered in the licence in respect of which the candidate has passed the examination in Aircraft and Engines mentioned in para 1(d).”
Rule 41. “Proof of competency- Applicants for licences and ratings shall produce proof of having acquired the flying experience and having passed satisfactorily the test and examinations specified in Schedule !l in respect of the licence or rating concerned:
(2) The Director General may, exempt a person who is a qualified Air Traffic Controller from Indian Air force or Indian Navy and who produces satisfactory evidence to show that he possesses the necessary experience, competency and standard of physical fitness as required under these rules from all or any of the examinations and medical or other technical examinations.
(3) The Director-General may, on examination of the syllabi, determine the relative equivalence of examinations for granting exemptions to such applicants from passing the examinations required under Schedule III.
(4) The Director-General may, require any candidate or training organisation to produce for examination all relevant training records, including the syllabi, certificates, mark-sheets, on-the-job training test reports, assessments, etc., in respect of the candidate who has undergone a course of training, with such training establishment.”
SCHEDULE II- AIRCRAFT PERSONNEL (See rule 7 and Part V) SECTION A- GENERAL
7. Examination -[(a) The technical and other examination for the issue of a licence, rating or type rating under this Schedule shall be completed within a period of two and a half years immediately preceding the date of application for the issue of the licence or rating, except for issue of Commercial Pilot’s Licence (CPL) and Airline Transport Pilot’s Licence (ATPL), and for issue of CPL and ATPL, such period shall be five years
c) Section 79- Examination for, and grant of certificate Related Aircraft rule is- Rule 41A. Checks, tests and examinations. – (1) The Director-General may conduct examination specified in Schedule II, may fix examination centres within India, appoint invigilators and lay down the procedure for conducting the examinations
d) Approved training course- (d-1) Aircraft rule- Rule 3 -(1-H) “approved training” means a training the curriculum of which has been approved by the Director General.
(d-2) Refer Civil Aviation Requirements- CAR-Section 7- Flight Crew Standards Training and Licensing,, Series D- Training Organisation, Part I- Issue -II- dated 30 January 2015Clause 8. 8. Training and Procedures Manual.
e) Approved training, examination and assessment programme- Related Aircraft rule is-(e-1) Rule 41B. Approved Training Organisation.
(3) (a) The FTO shall possess the requisite infrastructure, adequate facilities, qualified and trained manpower including instructors as may be specified by the Director-General and the simulator training in such organisation shall be undertaken on simulator approved by the Director-General.
(b) The FTP shall have a ‘Training and Procedure Manual’ and a ‘Quality Assurance Manual’ with contents as may be specified by the Director-General and both the documents shall be submitted to the Director General for approval.
(c) It shall be the duty of the FTP to provide a copy of the approved Training and Procedure Manual to its personnel for their use and guidance.
(e-2) Refer Civil Aviation Requirements- CAR-Section 7- Flight Crew Standards Training and Licensing,, Series D- Training Organisation, Part I- Issue -II- dated 30 January 2015. Clause 7- 7. Certificate of Approval.
f) “Approved training institute” means a training institute approved by the Director General of Shipping; – (f-1) Rule 41B Approved Training Organisation.-
(4) (a) The holder of a valid No objection Certificate may apply to the Director-General for issuance of approval of the FTP in the prescribed format along with a fee of two lakh rupees.
(b) The Director-General may, on being satisfied that all the requirements pertaining to the setting up of a FTP have been complied with, grant an approval to the FTP subject to such conditions as may be specified in the approval.
(F-2) Refer Civil Aviation Requirements- CAR-Section 7- Flight Crew Standards Training and Licensing,, Series D- Training Organisation, Part I- Issue -II- dated 30 January 2015. Clause 8. 8. Training and Procedures Manual.
g) “Assessment Centre”- Rule 41A. Checks, tests and examinations. – (1) The Director-General may conduct examination specified in Schedule II, may fix examination centres within India, appoint invigilators and lay down the procedure for conducting the examinations
(2) The Director-General may appoint Examiners for carrying out flying tests and technical examinations required under Schedule II and may also appoint a Board to conduct oral examinations when necessary.
(h) Training and assessment.- Related Aircraft Rules & Schedules are
41A. Checks, tests and examinations.
(1) The Director-General may conduct examination specified in Schedule II, may fix examination centres within India, appoint invigilators and lay down the procedure for conducting the examinations
(2) The Director-General may appoint Examiners for carrying out flying tests and technical examinations required under Schedule II and may also appoint a Board to conduct oral examinations when necessary.
(3. ………………….
SCHEDULE II- AIRCRAFT PERSONNEL (See rule 7 and Part V) SECTION A- GENERAL
“2. Flying Experience – (a) The evidence normally required as proof of flying experience shall consist of the production of a personal log book certified by the appropriate authority specified in Sub-Rule (4) of Rule 67A, or of a certified extract therefrom in the form which may be prescribed by the Director-General. Such flying experience shall be to the satisfaction of the Director-General.
(b) The flying experience required for the issue of Private Pilot’s Licence and Commercial Pilot ‘s Licences shall be acquired under the supervision of a Flight Instructor and shall be on aircraft having valid Certificate of Airworthiness, maintained in accordance with Rules 57-60 except Rule 59A and entered in the Aircraft Rating of Pilot’s licence currently held by him.[Provided that the flying experience on an aircraft having a valid special certificate of airworthiness issued by the Director-General, may also be counted if so provided in the relevant section of this Schedule and subject to conditions specified therein.
(c) The flying experience required for issue of Private Pilot’s and Commercial Pilot’s Licences shall be acquired at the flying training organizations approved/ recognised by the Director-General except in respect of the applicants qualifying for exemption under Rule 41.
(d) The flying experience acquired for the issue of various categories of flight crew licences shall be counted in the manner set out in Rule 67A.
(e) Flying training shall be completed in accordance with the syllabus prescribed by the Director-General.
(f). ……………”
6. Flying tests. – (a) The flying tests, prescribed in this Schedule may be carried out in any order by an Examiner approved by the Director General.
7. Examination – [(a) The technical and other examination for the issue of a licence, rating or type rating under this Schedule shall be completed within a period of two and a half years immediately preceding the date of application for the issue of the licence or rating, except for issue of Commercial Pilot’s Licence (CPL) and Airline Transport Pilot’s Licence (ATPL), and for issue of CPL and ATPL, such period shall be five years
SCHEDULE II- AIRCRAFT PERSONNEL (See rule 7 and Part V) Section J Commercial Pilot’s Licence (Aeroplanes)
1. Requirements for issue of Licence- An applicant for a Commercial Pilot’s Licence shall satisfy the following requirements:- …
(f) Flying Training,- He shall have completed the flying training in accordance with the syllabus prescribed by the Director-General.
(g) Other Requirements,-………
5.3.5) Submission of the Jurisdictional Officer-on issue of applicability of the aforesaid Circular-Submission- Para 2- It is to submit that similarity cannot be drawn between the courses provided by the Maritime Training Institute approved by the Directorate General of Shipping which are exempted vide Circular No. 117/36/2019-GST, dated 11-10-2019 issued byTRU and the course provided by the applicant. In this regard observations of the Appellate Authority for Advance Ruling under GST. Uttar Pradesh in appeal Order No. 07/AAAR/31/05/2023, dated 31-5-2023 may be referred to wherein it has been observed that “the Maritime Training Institutes and their training courses are approved by the Director General of Shipping and are recognized 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 thus the said institutes are educational institutions. It is observed that the sand institutes are empowered to impart training and certification of the said training in terms of Merchant Shipping Act, 1958 read with relevant Rules supra, whereas in the instant case the Aircraft Act and the Aircraft rules did not approve the appellant as an institute for conduct of examination that yields to or results into a qualification, but only to issue course completion certificate which is useful only as one of the enclosure to file the application for the Type Rating Examination conducted by the DGCA.” The applicant’s submission in para A.10(b) confirms this stand. Submission- Para 3- The issue of applicability of GST exemption to the Directorate General of Shipping approved maritime courses conducted by the Maritime Training Institutes of India has been issued with reference to representations received by the GST Council. GST Council being the appropriate authority to decide the issue. It is therefore more appropriate if the applicants approach the GST Council for issuance of necessary clarification regarding applicability of exemption in respect of courses conducted in the case of flying training institutes also.
5.3.6 Decision-on issue of applicability of the aforesaid Circular-
Let us discuss the issue of Conduction of Examination which results in grant of License/ Certificate of competency is decided in case of Maritime Institutes.
Para 4- Last sentence- “Further, Section 79 provides that the Central Government or a person duly authorised by it shall appoint persons for the purpose of examining the qualifications of persons desirous of obtaining certificate of competency under section 78 of the Act.”
Para5 – Under Rule 9 of the said Rules, the Director General of Shipping is empowered to designate assessment centres.
Further the provisions of sub- rules (6), (7) and (8) of the Rule 4 of the said Rules, empowers the Director General of Shipping, to approve (i) the training course, (ii) training, examination and assessment programme, and (iii) approved training institute etc.
As per the Merchant Shipping Act, 1958 and the said Rules, “Assessment Centres”[Refer Rule 4 (9) and Rule 9 (1)1; and “Approved Maritime Training Institutes” [Refer Rule 4 (8) and R 9(2)] are different entities-
As per the Aircraft Act & Rules “Examination Centre- “[Refer Rule 41A (1)] and “Approved Training Organisation/ Flying Training Organisation/ Institutes-” [Refer Rule 41B (3)] are different entities-Hence, submission of the Officers and his reliance on Advance Rulings referred by him , is not acceptable because the circular lays down the principal to decide what is educational institute and lays down criteria that the “educational institutions” has been defined to mean an institution providing 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.
From Circular it is clear that “Maritime Training Institutes” are approved and its Curriculum and training programme are approved by the Regulator Director General Shipping (DG Shipping) under provisions of Merchant Shipping Act, 1958, and Rules as aforesaid. Further Licensing examination is conducted by the “Assessment Centre s”, which actually results in grant of License under the Merchant Shipping Act, 1958, which is mandatory under the Law.
In case of applicant also, it is a “Approved Flying Training Institute, its curriculum is approved by the Director General of Civil Aviation (“DGCA”), Training is Certificate is granted only after passing of examination as per guidelines issued by DGCA The examiners are also approved examiners only by DGCA. Further Licensing examination are conducted by the DGCA at Examination centers approved under rule 41A of the Aircraft Rules. Only after this Examination conducted by DGCA through Examination center, the “Commercial Pilot License” is granted, which is mandatory for aviation.
Hence we have no hesitation, that the principles and reasons explained in the aforesaid Circular for “Maritime Training Institutes” are equally applicable to “Flying Training Institutes” approved by the DGCA, having approved curriculum.
5.4) Applicability of decisions of other Advance Ruling Authorities on similar/ same issue.
The Authority of Advance Ruling, Karnataka in case of M/s. CAE FLIGHT TRAINING (INDIA) PRIVATE LIMITED in Advance Ruling No. KAR ADRG 13/2023, decided on Date: 20-03-2023, and The Authority of Advance Ruling, Uttar Pradesh in case of M/s. CAE FLIGHT TRAINING (INDIA) PRIVATE LIMITED in Advance Ruling No. UP ADRG 14/2022, decided on Date: 02-12-2022, have answered similar Question-
5.4.1) Applicant has submitted that- these AAR are not applicable to his case because facts of his case those in the AAR are different.
1) The Applicants in both cases are Distinct persons of same Corporate Entity. CAE FLIGHT TRAINING (INDIA) PRIVATE LIMITED.
2) Training is provided to persons already holding Commercial Pilot Licenses.
3) Training is given for extension of Licenses.
4) In both these AAR, the training is given on Simulators.
5) Hence Applicant submitted that these AAR are not applicable. Secondly, he relied on Facts & decision in its own case under Service Tax regimes delivered by Hon’ble Bombay High Court to be followed.
Applicants Actual submission-. -The present facts of the case are distinct from the facts disputed in Re: M/s CAE Simulation Training Pvt. Ltd., 2023 (8) TMI 969- Appellate Authority for Advance Ruling, Uttar Pradesh (‘UP AAAR’) and in Re: CAE Flight Training (India) Pvt. Ltd., 2023 (3) TMI 1115- Authority for Advance Rulings, Karnataka (‘Karnataka AAR’). Hence, the said rulings are not applicable.
B.1. It is submitted that the rulings of the Hon’ble Appellate Authority for Advance Ruling in UP AAAR and of the Hon’ble Authority for Advance Rulings in Karnataka AAR cannot be made applicable since the facts of the present case are distinct from the facts of the aforementioned rulings.
B.2. The UP AAAR Ruling dealt with case of extension of Aircraft Type Rating to such independent pilots who were already holding the respective Commercial Pilot License. Such training is provided to the pilots on a simulator so as to allow them to fly a specific type of aircraft. Relevant extracts of the said UP AAAR ruling are herewith extracted as under-
“1.1 The Appellant is a group company of Inter Globe Enterprises Limited which is engaged in the business of facilitating the training of commercial pilots on the Aircraft Stimulators installed at its training facilities 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. The Appellant is an Approved Training Organization by DGCA in Noida Uttar Pradesh wherein ATR training courses are provided to independent pilots who are already holding their commercial pilots license as per DGCA approved syllabus and manual.”
…Emphasis Supplied
B.4. In view of the above, it is submitted that the type of training services provided by the assessee in the above rulings are clearly distinct from the services provided by the Applicant in the present case. The training services provided by the Applicant is for the purpose of obtaining a qualification being the CPL. Whereas the assessee in the above rulings is providing training to already existing holders of the CPL.
In any case, the matter has been settled by the Hon’ble Bombay High Court in the Applicant’s own case and by the Hon’ble Delhi High Court. Similar submission is made regarding decision of the Uttar Pradesh Advance Ruling.
5.4.2) Submission of the Jurisdictional Officer It is submitted that similarity cannot be drawn between the courses provided by the Maritime Training Institute approved by the Directorate General of Shipping which are exempted vide Circular No. 117/36/2019-GST, dated 11-10-2019 issued by TRU and the course provided by the applicant. In this regard observations of the Appelate Authority for Advance Ruling under GST. Uttar Pradesh in appeal Order No. 07/AAAR/31/05/202.3, dated 31-5-2023 may be referred to wherein it has been observed that “the Maritime Training Institutes and their training courses are approved by the Director General of Shipping and are recognized 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 thus the said institutes are educational institutions. It is observed that the said institutes are empowered to impart training and certification of the said training in terms of Merchant Shipping Act. 1958 read with relevant Rules supra, whereas in the instant case the Aircraft Act and the Aircraft rules did not approve the appellant as an institute for conduct of examination that yields to or results into a qualification, but only to issue course completion certificate which is useful only as one of the enclosure to file the application for the Type Rating Examination conducted by the DGCA.” The applicant’s submission in para A.10(b) confirms this stand
To examine the facts and competing submissions, we need to reproduce facts and reasoning of decision in both these Advance Ruling Orders.
5.4.3) Applicability of decision of other Advance Ruling Authority, Karnataka in case of M/s. CAE FLIGHT TRAINING (INDIA) PRIVATE LIMITED in Advance Ruling No. KAR ADRG 13/2023, decided on Date: 20-03-2023, has answered similar Question as under,
Facts of case observed by the Authority –
in Para 5.3- “5.3 CAE is currently engaged in providing dry training to the Commercial Pilot License (‘CPL) holders from various airlines, who have already been type rated for specific aircraft. Under dry training, airline companies are granted the right to use the full flight simulators for scheduled hours, with their pilots training under the guidance of the airline company’s own instructors. (Emphasis supplied)
5.4 CAE is also engaged in type rating training to CPL holders who are not employed by any airlines if they approach directly for undergoing this training. CPL holders who are also on the rolls of various airlines on a stipend basis (as a trainee) and whose confirmation depends on getting aircraft-specific type rating certification can approach CAE for undergoing such training. CAE offers pilots the most advanced type rating training, using a practical and operational learning approach. (Emphasis supplied)
5.5 These training services are provided in accordance with 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.
Findings, Discussion & decision by the Authority-
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 applicant does not result into any qualification and also is not recognized by the law.
29. The applicant placed reliance on the service tax case of Indian Institute of Aircraft Engineering Vs. Union of India 2013 and in the said case the petitioner was an Aircraft Maintenance Engineering Training School, approved by the DGCA, for providing Air: raft Maintenance Engineering (AME) training and also to conduct examination as per the course approved by the DGCA. These facts are different from the facts of the case at hand in as much that the applicant is not empowered to conduct the examination but imparts training and issues completion certificate, which serves the purpose of a document required for filing the application with the DGCA so as to attend the examination. Thus the said case law is not applicable to the facts and circumstances of the case in hand.
30. The applicant also referred the Circular NO.117/36/2019-GST dated 11.10.2019 wherein a clarification on applicability of GST exemption to the DG Shipping approved maritime courses conducted by Maritime Training Institutes of India to the effect that the Maritime Training Institutes and their training courses are approved by the Director General of Shipping and are recognized 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 thus the said institutes are educational institutions. It is observed that the said institutes are empowered to impart training and certification of the said training in terms of Merchant Shipping Act, 1958 read with relevant rules supra, whereas in the instant case the Aircraft Act and the Aircraft ru.es did not approve the applicant institute for conduction of examination that yields to a qualification, but only to issue course completion certificate which is useful only as one of the enclosure to file the application for the Type Rating examination conducted by the DGCA. Further, there is no circular applicable to the said Type Rating training, being given by the applicant and thus the Circular dated 11.10.2019 relevant to Shipping courses is not applicant to the instant case.
31. Therefore the impugned services of the applicant are not covered under entry number 66(a) of the Notification 12/2017-Central Tax (Rate) dated 28-06-2017, as amended and hence do not qualify for exemption. Thus the said services are exigible to GST.
5.4.4) Applicability of decision of other Advance Ruling Authority, Uttar Pradesh in case of M/s. CAE FLIGHT TRAINING (INDIA) PRIVATE LIMITED in Advance Ruling No. UP ADRG 14/2022, decided on Date: 02-12-2022, has answered similar Question.
Facts as observed by the Authority are-
Para-16.1 We observe that the applicant has claimed that their organization has been approved by the DGCA as a Type Rating Training organization and they are conducting Type Rating Courses for pilots who are already holding CPL(A) as per DGCA approved curriculum. The training of pilots on simulators is just for obtaining the extension of aircraft type ratings on their existing licenses. 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.
Findings, Discussion & decision by the Authority
Para- 16.4 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. Merely undergoing simulation training with the applicant without endorsement of the licence by the 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. Thus 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. 17. As such, we are of the view that 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 18. In view of the above discussions, we, both the members pass the following ruling-
5.4.5) Findings, observations about applicability of these AAR and decision
(a) Both these AAR- Both these AAIR- have similar facts,
1) The Applicants in both cases are distinct persons of same Corporate Entity. CAE FLIGHT TRAINING (INDIA) PRIVATE LIMITED.
2) Training is provided to persons already holding Commercial Pilot Licenses.
3) Training is given for extension of Licenses.
4) In both these AAR, the training is given on Simulators.
5) Both the Authorities have answered that “services provided by the Applicant are not exempted under SI. No. 66 (a) of the Notification No, 12/2017-Central Tax.
(b) In the case of this Applicant- facts are different.
1) Training is provided to the persons who desire to obtain “Commercial Pilot Licenses”
2) The Flying Training Institute and its curriculum are approved by DGCA.
3) Training is given of Actual Flying of Aircrafts- as approved by the DGCA. Examiners approved by DGCA are authorised to conduct Examination which is necessary for grant of Course Completion Certificate for COMMERCIAL PILOT LICENCSE-AEROPLANE with MULTIENGINE INSTRUMENT RATING (MEIR) course. This is not a License to fly, but necessary qualifying Certificate for examination conducted by the DGCA, for grant of License.
5.4.6) Decision on applicability of aforesaid AAR orders-
1) As the facts of both these AAR are different than those in this case,
2) Secondly, both these decisions are based on common thread of decision that “Merely undergoing simulation training with the applicant without endorsement of the licence by the competent authority will not enable a pilot to fly an aircraft or seek employment “. However, this interpretation is already rejected by Hon’ble Delhi High Court in case of in case of Indian Institute Aircraft Engineering (supra) and we have guidance in form of Bombay High Court judgment in the applicants own case, though pertaining to service Tax era. Hence we are not inclined to follow the decision and reasoning for arriving at the decision stated by these Authorities.
6). In view of the extensive deliberations as held hereinabove, we pass an order as follows:
ORDER
(Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
For reasons as discussed in the body of the order, the questions are answered thus –
Question 1: Whether the supply of flying training services provided by the Applicant to their trainees will be taxable or exempt under the GST law?
Answer: – Supply of Flying Training Services to trainees for completion of approved course for Commercial Pilot License (Aeroplanes), is exempted vide entry at Sr. No. 66 of the Notification No. 12/2017-Central tax- (Rate) dated 28th June 2018.
Question 2: If such a supply is taxable, what will be the rate of GST applicable?
Answer: – Not applicable, in view of answer to first question.
