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2010 (2) TMI 642 - AAR - Service TaxAdvance Ruling Service tax liability Classification - Commercial training and coaching center or Vocational training institute - Whether CFTI can be considered as an institute imparting training which is specifically excluded from the definition of Commercial coaching and training centre as defined under Section 65(27) of the Finance Act, as an establishment which issues a certificate recognized by law for the time being in force - CFTI has been approved by the Directorate General of Civil Aviation (DGCA) as a Type Rating Training Organization (TRTO) for the enhancement of the skill and knowledge of trainees - It is based on the results of these examinations and fulfillment of other prescribed conditions that the DGCA would endorse the type rating of aircraft in the licence of the trainee pilots - In the present circumstances therefore the Certificate of Course Completion issued by CFTI cannot said to be a certificate which is recognized by law for the time being in force Regarding vocational training institute - Course Completion Certificate issued by CFTI cannot be said to be recognized by law for the time being in force - On perusal of these formats it is noticed that these are required to be certified by a DGCA approved examiner and not by the training institute unless the institute itself is designated as an approved Examiner CFTI cannot be considered as an institute or establishment which is specifically excluded from the definition of commercial coaching and training centre under clause (27) of Section 65 of the Finance Act. 1994 - CFTI cannot be considered as a vocational training institute for the purpose of exemption from service tax under the category of commercial training and coaching service in terms of Notification No. 24/2004-ST dated. 10.09.2004 - Accordingly Ruling is given
Issues Involved:
1. Whether CFTI can be considered as an institute imparting training excluded from the definition of 'Commercial coaching and training centre' under Section 65(27) of the Finance Act, 1994. 2. Whether CFTI can be considered a 'Vocational Training Institute' exempted from tax under the category of 'Commercial Training & Coaching Service' as per Notification No. 24/2004 dated 10.9.2004. Detailed Analysis: Issue 1: Exclusion from 'Commercial coaching and training centre' Definition Legal Framework and Definitions: - Section 65(27) of the Finance Act, 1994 defines "commercial training or coaching centre" and excludes institutes issuing certificates recognized by law. - CFTI argued that its Certificate of Course Completion is recognized by law, as it is approved by the Directorate General of Civil Aviation (DGCA). Arguments by CFTI: - CFTI is approved by DGCA as a Type Rating Training Organization. - Rule 6A of the Aircraft Rules, 1937 mandates aircraft-specific training for pilots. - The certificate issued by CFTI is necessary for pilots to get their licenses endorsed for specific aircraft. Revenue's Contention: - Certificates recognized by law are those approved by statutory authorities like UGC or AICTE. - DGCA's clarifications stated that the certificate from CFTI only enables pilots to appear for DGCA exams, not a statutory requirement. Authority's Observations: - The DGCA's provisional approval to CFTI does not equate to full recognition. - The application form for aircraft rating does not explicitly require a certificate from CFTI. - The certificate issued by CFTI is not recognized by law as it is not a statutory requirement. Conclusion: - CFTI's certificate is not recognized by law for the purposes of exclusion from the definition of 'commercial training or coaching centre' under Section 65(27) of the Finance Act, 1994. Issue 2: Consideration as a 'Vocational Training Institute' Legal Framework: - Notification No. 24/2004-ST exempts services provided by a 'vocational training institute' from service tax. - A 'vocational training institute' is defined as one that imparts skills enabling employment or self-employment directly after training. Arguments by CFTI: - CFTI provides aircraft-specific training enabling pilots to seek employment with airlines. - Cited the case of M/s Pasha Educational Training Institute where similar training was considered vocational. Revenue's Contention: - Pilots cannot seek employment directly after training with CFTI; they need DGCA endorsement. - The training does not directly result in employment or self-employment. Authority's Observations: - Employment as a pilot requires DGCA endorsement, not just training from CFTI. - The training provided by CFTI does not directly enable employment; it is a preparatory step. Conclusion: - CFTI cannot be considered a 'vocational training institute' for the purpose of exemption from service tax under Notification No. 24/2004-ST. Final Ruling: 1. CFTI cannot be considered as an institute excluded from the definition of 'commercial coaching and training centre' under Section 65(27) of the Finance Act, 1994. 2. CFTI cannot be considered a 'vocational training institute' for exemption from service tax under Notification No. 24/2004-ST dated 10.09.2004.
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