2023 (3) TMI 1115 - AAR - GST

Exemption from levy of Central Goods and Service Tax Karnataka Goods and Service Tax or not - supply of the aircraft type rating training services to commercial pilots in accordance with the training curriculum approved by the Directorate General of Civil Aviation for obtaining the extension of aircraft type ratings on their existing licenses - covered under SI. No. 66 (a) of the Notification No. 12/2017-Central Tax (Rate) dated 28.6.2017 and SI. No. 66 (a) of the Notification No. A.NI.-2-843/Xl-9(47)/ 17- U.P. Act-1-2017-Order- (10) -2017 dated 30.6.2017 or not. Whether the Applicant qualifies to be an educational institution and if so whether they are entitled to the benefit of entry number 66(a) of Notification 12/2017 or not? - HELD THAT - The services provided by an educational institution to its students, faculty and staff, covered under heading 9992 or 9963, are exempted unconditionally under entry number 66(a) of Notification 12/2017 supra. Educational institution , for the purpose of this notification means an institution providing services by way of education as a part of a curriculum for obtaining a qualification recognized by law for the time being in force. Therefore an institution becomes an Educational institution only when the services provided by them are (i) part of a curriculum, (ii) the services yield a qualification and (iii) the said qualification must be recognized by law for the time being in force. It is observed from the facts of the case that the applicant undertakes the supply of the ATR extension training services to their trainees as per the agreement. The pilots holding the CPL(A) have to undergo the ATR extension training for the specific type of aircraft(s) so as to fly the said aircraft with the commercial airlines. Thus they approach the applicant either directly on their own or through the airlines with whom they are employed (on stipend basis as trainee or otherwise). The applicant institute is approved by the DGCA to conduct aircraft specific type rating training courses, as per the curriculum approved by the DGCA. The applicant issues a course completion certificate once the type rating training is completed. The pilots have to file an application with the DGCA, for extension of ATR, along with the required documents amongst which the course completion certificate is the one which evidences that the said pilot has undergone the training. ? - Whether the training and course completion certificate issued thereafter amount to a qualification recognized by any law or not? - HELD THAT - The candidates who receive training from the applicant would be subjected to examination / test by the DGCA approved examiner. It is based on the results of these examinations and fulfilment of other prescribed conditions that the DGCA would endorse the type rating of aircraft in the licence of the trainee pilots. Therefore, the course completion certificate issued by the applicant can t said to be a certificate which is recognized by law for the time being in force. The fact that such a certificate may be taken into account by the DGCA approved examiner for the purpose of evaluating the experience and content of training will not make it statutory in character. Whether the Type Rating Training by the applicant enables the trainee to seek employment or undertake self employment directly after such training or coaching? - HELD 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. 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, whereas in the instant case the Aircraft Act and the Aircraft rules 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. 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.

Summary

Issues Involved:
1. Whether the applicant qualifies as an educational institution.
2. Whether the services provided by the applicant are exempt from GST under SI. No. 66(a) of Notification No. 12/2017-Central Tax (Rate).

Summary:

1. Qualification as an Educational Institution:
The applicant, engaged in providing type rating training on simulators for commercial pilots, contended that they qualify as an educational institution under GST law. They argued that their training programs are part of a curriculum approved by the Directorate General of Civil Aviation (DGCA) and lead to a qualification recognized by law. The applicant cited definitions from legal dictionaries and case law to support their claim that the training confers skills and accomplishments necessary for a particular profession.

2. Recognition by Law:
The applicant argued that the completion of their training program is recognized by law, as it is required for pilots to apply for an extension of aircraft type ratings (ATR) on their licenses, which is a prerequisite for employment as a pilot with commercial airlines. They referenced the Aircraft Act, Aircraft Rules, and various Civil Aviation Requirements (CARs) issued by the DGCA to support their claim.

3. Examination and Certification:
The applicant's training program includes classroom and cockpit-based training, followed by an examination conducted by the applicant. However, the DGCA conducts the final examination for ATR extension and issues the necessary endorsements on the pilot's license. The applicant issues a course completion certificate, which is a prerequisite for applying to the DGCA for the ATR extension examination.

4. Legal Precedents:
The applicant referred to the case of Indian Institute of Aircraft Engineering v. Union of India, where the Delhi High Court held that training provided by DGCA-approved institutes is exempt from Service Tax as it leads to a qualification recognized by law. However, the Authority for Advance Rulings (AAR) noted that the facts of the present case are different, as the applicant is not authorized to conduct the final examination or issue the qualification directly.

5. Circulars and Clarifications:
The applicant also referred to Circular No. 117/36/2019-GST, which exempts DG Shipping-approved maritime courses from GST. However, the AAR observed that this circular is not applicable to the applicant's case, as the applicant's training program does not result in a qualification recognized by law but only prepares candidates for the DGCA examination.

Conclusion:
The AAR ruled that the applicant does not qualify as an educational institution under GST law, as their training program does not directly result in a qualification recognized by law. Consequently, the services provided by the applicant are not exempt from GST under SI. No. 66(a) of Notification No. 12/2017-Central Tax (Rate). The supply of aircraft type rating training services to commercial pilots is exigible to GST under the CGST/KGST Act 2017.