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2025 (3) TMI 1139 - AT - Service TaxClassification of services - Commercial Coaching and Training Services or not - training provided by M/s. Bombay Flying Club in Aircraft Maintenance Engineering - Doctrine of mutuality - HELD THAT - There is a clear cut distinction is made out between acquirement of qualification to be declared eligible in completing certain course and the requirement of issue of licence to practice on the basis of the said qualification to enable a person to take up the profession accordingly. On the basis of said finding of the Hon ble Delhi High Court in M/S INDIAN INSTITUTE OF AIRCRAFT ENGINEERING VERSUS UNION OF INDIA ORS 2013 (5) TMI 592 - DELHI HIGH COURT that has struck down the said clarification Circular of the CBEC issued on dated 11.05.2011 and this Tribunal has rendered consistent decisions on the issue which is also referred in the written submission filed by learned Counsel for the Appellant as noted below we are of the considered view that judicial precedent as set by Hon ble Delhi High Court and by this Tribunal with several decisions as passed in the case of Hindustan Institute of Aeronautics 2015 (2) TMI 140 - CESTAT NEW DELHI Star Aviation Academy 2016 (1) TMI 1376 - CESTAT NEW DELHI and also by Hon ble Allahabad High Court in the case of Garg Aviations Ltd. 2014 (5) TMI 955 - ALLAHABAD HIGH COURT on the issue has to be followed by parallel or subordinate judicial forums. The certificate issued by Appellant can be treated as certificate issued in accordance to law so as to cover it under exception clause of imparting commercial and educational training. The portion of statute regarding issue of certificate that was deleted from Section 65(27) with effect from 01/05/2011 was brought into force by way of its introduction through Notification No. 33/2011-ST that covers the period of the order passed by the Commissioner (Appeals) also would meet the same result. Conclusion - i) Training provided by institutions issuing certificates recognized by law is exempt from Service Tax under Section 65(27) of the Finance Act 1994. ii) The doctrine of mutuality exempts services provided by a club to its members from Service Tax as there is no taxable transaction. Appeal allowed.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS 1. Commercial Coaching and Training Services Relevant Legal Framework and Precedents: The Finance Act, 1994, under Section 65(105)(zzc), defines taxable services for commercial coaching or training. Section 65(27) excludes institutions issuing certificates or diplomas recognized by law. The Delhi High Court in Indian Institute of Aircraft Engineering v. Union of India interpreted similar provisions, exempting certain training from Service Tax. Court's Interpretation and Reasoning: The Tribunal considered the Delhi High Court's ruling, which distinguished between acquiring qualifications and obtaining a license to practice. The Tribunal found that the certificates issued by the Bombay Flying Club, approved by the DGCA, were recognized by law, aligning with the precedent set by the Delhi High Court. Key Evidence and Findings: The Tribunal noted a letter from the Department of Civil Aviation confirming the DGCA's approval of the training and its necessity for obtaining a pilot license or maintenance engineering certificate. Application of Law to Facts: The Tribunal applied the exclusion clause in Section 65(27) to the training provided by the club, determining it was not subject to Service Tax as it issued certificates recognized by law. Treatment of Competing Arguments: The Department argued that the certificates were merely course completion certificates, not recognized by law. However, the Tribunal favored the Assessee's argument, supported by the Delhi High Court's interpretation, that the certificates were indeed recognized. Conclusions: The Tribunal concluded that the training provided by the club was exempt from Service Tax under the provisions of the Finance Act, 1994. 2. Management, Maintenance, and Repair Services Relevant Legal Framework and Precedents: Section 65(64) of the Finance Act, 1994, defines taxable services related to management, maintenance, and repair. The doctrine of mutuality, as interpreted by the Supreme Court in Calcutta Club Ltd., holds that services between a club and its members are not taxable. Court's Interpretation and Reasoning: The Tribunal applied the doctrine of mutuality, recognizing that the club's services to its members did not constitute a taxable transaction as there was no separate service charge beyond cost recovery. Key Evidence and Findings: The Tribunal observed that the club only charged members the cost of maintenance without any profit, supporting the application of mutuality. Application of Law to Facts: The Tribunal found that the absence of a profit motive and the nature of the club's relationship with its members exempted the services from Service Tax. Treatment of Competing Arguments: The Department contended that the club's registration under the Companies Act made it liable for Service Tax. However, the Tribunal emphasized the mutual nature of the club-member relationship, aligning with the Supreme Court's precedent. Conclusions: The Tribunal concluded that the maintenance and repair services provided by the club to its members were not subject to Service Tax due to the doctrine of mutuality. SIGNIFICANT HOLDINGS Verbatim Quotes of Crucial Legal Reasoning: "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." Core Principles Established:
Final Determinations on Each Issue:
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