2014 (5) TMI 955 - HC - Service Tax

Commercial Training or Coaching Services - Whether, the respondent is liable to service Tax on Flying Training Institute and Aircraft Engineering Institutes under Commercial Training or Coaching Services - Held that - A similar issue arose before the Delhi High Court in Indian Institute of Aircraft Engineering 2013 (5) TMI 592 - DELHI HIGH COURT wherein it was held that, 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 a Court of law. The inference can only be one, that the Course Completion Certificate/training offered by such Institutes is recognized by law. Revenue has not been able to persuade the Court to take a different view. The appeal filed by the revenue will not hence, give rise to any substantial questions of law. - Decided against Revenue.

Summary

Issues:
1. Whether service tax could be levied on the assessee?
2. Whether the course completion certificate offered by the institutes qualifies as recognized by law?

Analysis:
1. The appeal before the Allahabad High Court was filed by the revenue challenging the order of the Customs, Excise and Service Tax Appellate Tribunal, New Delhi. The primary issue was whether service tax could be imposed on the assessee, M/s Garg Aviations Limited, running a Flying Training Institute and Aircraft Maintenance Engineering Institute. The Tribunal relied on a decision of the Delhi High Court in a similar case and concluded that service tax could not be levied on the assessee.

2. The Delhi High Court's judgment in Indian Institute of Aircraft Engineering case was crucial in the analysis. The Delhi High Court examined the provisions of Section 65(27) of the Finance Act, 1994, which excluded training centers issuing recognized certificates from the ambit of commercial training or coaching centers for service tax. The Court observed that the activities of the petitioner were regulated by the law, and the Course Completion Certificate offered by approved institutes held value in the eyes of the law. The Court emphasized that the Certificate/training/qualification offered by approved Institutes was recognized by law for various purposes, including eligibility for obtaining licenses.

3. The Delhi High Court's decision highlighted the importance of recognition by law in determining the liability for service tax. The Court noted that the Act, Rules, and Civil Aviation Requirements (CAR) provided for approval of institutes and conditions for such approval, recognizing the value of the Course Completion Certificate offered by approved institutes. The judgment concluded that the Instruction holding the petitioner assessable to service tax was contrary to Section 65(27) and the Notification dated 25th April 2011. Consequently, the Instruction and show cause notices were quashed, and the writ petition was disposed of in favor of the petitioner.

4. The Allahabad High Court, in line with the Delhi High Court's reasoning, dismissed the appeal by the revenue as it did not raise substantial questions of law. The judgment reaffirmed the importance of recognition by law in determining the liability for service tax on training and coaching institutes. The legal analysis provided clarity on the interpretation of relevant provisions and their application in cases involving the imposition of service tax on educational and training services.