GST on Commercial Pilot License Training Fees, Goods and Services Tax - GST

[RAVINDRA SANCHETI]

Hello

One of the client is a company registered as Non Profit Organisation and providing services of Commercial Pilot License Training to students.

Query - Whether the company is liable for GST on Training Fees collected from their students on Training for Commercial Pilot License ? Please give reference of circular or notification if exempt.

Posts / Replies

[Alkesh Jani]

Sir, In my point of view GST is applicable.

Our experts may correct me if mistaken.

Thanks

[Alkesh Jani]

Sir,

The training of commercial pilot can be classified under HSN 99929. No Exemption is available. Therefore, GST is applicable.

Our experts may correct me if mistaken.

Thanks,

[YAGAY and SUN]

We endorse the view of Mr. Jani.

[RAVINDRA SANCHETI]

Sir,

Thanks for reply

In service tax commercial pilot training was exempted since it is considered as non commercial training and coaching, In the decisions given by Delhi High Court in case of M/S Indian Institute Of Aircraft ... vs Union Of India & Ors on 21 May, 2013, Training and coaching of Pilot is not considered as commercial Training and coaching. All the flying clubs in India were not paying service tax on Pilot training services.

After implementation of GST, The flying clubs in India are not charging GST on their services as of now considering as non commercial coaching services.

Can this be covered in Heading 9992 - Services Provided by educational institution to its students which is exempt under notification 12 of Central tax (Rate)

[Alkesh Jani]

Sir,

First of all, the decision of Hon’ble High Court, is for erstwhile law i.e. Service Tax, and it may be of no help to you in GST regime. For the query raised by you and reply given was with regards to GST Law. For better understanding, the Section 17(5)(a) is given below:-

“(a) motor vehicles and other conveyances except when they are used––

(i) for making the following taxable supplies, namely:-

(A) further supply of such vehicles or conveyances ; or

(B) transportation of passengers; or

(C) imparting training on driving, flying, navigating such vehicles or conveyances;”

From above, it is clear that you are eligible to take ITC of motor vehicles and other conveyances (in your case air-craft, gliders etc.) and you can take ITC only if you are to make taxable supplies, i.e. imparting training on flying.

The exemption by an educational institute to its student and staff is limited to services mentioned and is not applicable in your case, moreover, in your case, if skill development corporation has declared any such scheme then you can avail that exemption, but as far as my knowledge permits no such scheme is declared, therefore, you are not eligible for this exemption also.

Concluding, it can be said that you are required to pay GST.

Hope now it is be clear for you.

Thanks,

[Akash Deep]

Dear All,

I have read the answers above and unfortunately i have different opinion. In my view the services provided by flight training institutes providing training and coaching to individuals trying to secure commercial pilot license are not taxable as being exempted under entry 66 of the Notification No. 12/2017- Central Tax. Each state has also issued identically similar notification for conferring such benefit with respect to SGST. =Relevant exemption entry is given below:

"

 

“Notification No. 12/2017 Central Tax (Rate)

Sr. No.	Chapter heading, Group or service code (Tariff)	Description of Service	Rate (per cent.)	condition
66	Heading 9992	Services provided- by an educational institution to its students, faculty and staff;	Nil	Nil

 

Notification No. 12/2017- State Tax (Rate)

Sr. No.	Chapter heading, Group or service code (Tariff)	Description of Service	Rate (per cent.)	condition
66	Heading 9992	Services provided- by an educational institution to its students, faculty and staff;	Nil	Nil

 

Term educational institute has been defined under Clause (y) of Para 2 of the Notification No. 12/2017 Central tax and Notification No. 12/2017State Tax (Rate) as

“educational institution means an institution providing services by way of-

1. pre-school education and education up to higher secondary school or equivalent;
2. education as a part of a curriculum for obtaining a qualification recognised by law for the time being in force;
3. education as a pat of an approved vocational education course;”

A perusal of the entry 66 of the exemption notifications make is very clear that the exemption provided therein is very broad in scope and a blanket exemption from levy of CGST and TGST has been provided on any intra-state supply of services by an educational institution to its student, faculty and staff. No restriction has been made on the basis of nature of services. Only criteria for availing exemption is that supplier of service must qualify as ‘educational institution’. Further, educational institution has been as an institution providing services by education as a part of a curriculum for obtaining a qualification recognised by law for the time being in force. It may be noted that any institution will qualify as educational institution if the education provided by it forms part of a curriculum which have to be completed to obtain any qualification recognised by the law for the tie being in force. Words “education”, curriculum and “qualification recognised by law” are of utmost important to understand the true scope of such definition.

Term education has been interpreted by Hon’ble Supreme court and various High Courts. The term ‘education’ in the broad sense is not only a pedagogical one. Punctuating down to the basic meaning of the term, it means to plunge a man’s body, mind and soul of ignorance. It enhances an individual’s personality and provides him confidence to reach out to the world. In literal terms, 'Education' according to Chambers Dictionary is "bringing up or training; strengthening of the powers of body or mind; culture." In Advanced Law Lexicon (P. Ramanatha Aiyar, 3rd Edition, 2005, Vol.2) 'education' is defined in very wide terms. It is stated: "Education is the bringing up; the process of developing and training the powers and capabilities of human beings. In its broadest sense the word comprehends not merely the instruction received at school, or college but the whole course of training moral, intellectual and physical; is not limited to the ordinary instruction of the child in the pursuits of literature. It also comprehends a proper attention to the moral and religious sentiments of the child. And it is sometimes used as synonymous with 'learning'.

 

Hon’ble Supreme Court in case of P.A. Inamdar and Ors. v. State of Maharashtra and Ors, AIR 1976 SC 10 while dealing with the basic concept of education has expressed the view as follows:

“Education is "continued growth of personality, steady development of character, and the qualitative improvement of life. A trained mind has the capacity to draw spiritual nourishment from every experience, be it defeat or victory, sorrow or joy. Education is training the mind and not stuffing the brain."

We want that education by which character is formed, strength of mind is increased, the intellect is expanded, and by which one can stand on one's own feet." 'The end of all education, all training, should be man-making. The end and aim of all training is to make the man grow. The training by which the current and expression of will are brought under control and become fruitful is called education"

Education, accepted as a useful activity, whether for charity or for profit, is an occupation. Nevertheless, it does not cease to be a service to the society. And even though an occupation, it cannot be equated to a trade or a business

 

Hon’ble Supreme Court in case of Schooling, Sole Trustee, Lok Shikshana Trust v. C.I.T (1976) 1 SCC 254 wherein while dealing with the conception of education their Lordships have observed thus:

“Education means the systematic instruction, schooling or training given to the young in preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received...what education connotes is the process of training and developing the knowledge, skill, mind and character of students by formal schooling.”

 

D.4 From the above it is very clear that the term ‘education’ as in literal sense and as defined by the Hon’ble Supreme Court, is much wider. Term education encompasses every learning, experience and knowledge gained consciously or unconsciously. Education is a process by which latent capabilities and qualities of a person got polished and refined and makes that person a whole new one in terms of intellectual, social and moral. In a nutshell what education connotes is the process of training and developing the knowledge, skill, mind and character of students by formal schooling.

 

D.5 Term Curriculum has been used in the definition of educational institution in its general sense and should be interpreted in its literal sense. The term ‘curriculum’ refers to the lessons and academic content taught in a school or in a specific course or program. As per the Oxford English Dictionary, term curriculum means “the subjects comprising a course of study in a school or college”.

Expression “recognised by the law” was examined by the Hon’ble Delhi High Court in great details in the identical context as to the issue in instant case. In the case of M/s. Indian Institute of Aircraft Engineering vs Union of India, 2013[30] S.T.R.689(Del.).

The above judgment was against followed in the case of Commissioner of Central Excise, Customs & Service tax, vs M/s Garg Aviations Ltd. Central Excise Appeal No. 97 of 2014. The relevant part of the judgment is reproduced asunder:

 

“The following questions of law have been framed:

(i.) Whether, the respondent is liable to service Tax on Flying Training Institute and Aircraft Engineering Institutes under Commercial Training or Coaching Services?

(ii.) Whether, the course Completion Certificate offered by such Institutes, to successful students, qualifies as any certificate of diploma or degree or any educational qualification recognized by law for the time being in force or not?

 

The assessee, namely M/s Garg Aviations Limited is a company registered under the Companies Act, 1956 and is running a Flying Training Institute and Aircraft Maintenance Engineering Institute at Kanpur. It is engaged in providing training and coaching to individuals in the field of flying of aircraft for obtaining Commercial Pilot License from the Director Civil Aviation (DGCA), New Delhi. It is also engaged in providing training for obtaining Basic Aircraft Maintenance Engineering Licence.

 

A similar issue arose before the Delhi High Court in Indian Institute of Aircraft Engineering (Supra). The Delhi High Court held as follows:

1. The petition impugns,

(i) the Instruction No.137/132/2010-ST dated 11.05.2011 of the respondent no.2 Central Board of Excise & Customs (CBEC) to the effect that Flying Training Institutes providing training for obtaining Commercial Pilot Licence (CPL) and Aircraft Engineering Institutes for obtaining Basic Aircraft Maintenance Engineering Licence (BAMEL) come in the category of coaching centres as laid down in Section 65(27) of the Finance Act, 1994 and therefore assessable to service tax; and,

(ii) the show cause notice dated 30.03.2012 issued by the respondent no.4 The Additional Commissioner of Service Tax to the petitioner.

The Delhi High Court then observed:

13. Section 65(27) as it stood till 30 th April, 2011 excluded from the domain of commercial training or coaching centres, 'training centres or establishments issuing any certificate or diploma or degree or any educational qualification recognized by law'. Even after 30th April, 2011, though the part of Section 65(27) making such exclusion has been deleted but the Notification dated 25th April, 2011 supra issued in exercise of powers under Section 93 of the Finance Act has exempted "coaching or training leading to grant of a certificate or diploma or degree or any educational qualification which is recognized by any law from the whole of Service Tax leviable under Section 66 of the Finance Act".

14. We have wondered, what could be the reason for exempting from payment of service tax those training or coaching centres, even though commercial, whose certificate/degree/diploma/ qualification is "recognized by law." The only plausible reason, according to us, can be to exclude from ambit of service tax those training or coaching centres which are otherwise regulated by any law in as much as recognition of certificate/degree/diploma/qualification conferred by such training or coaching centres will necessarily entail regulation by the same law of various facets of such training or coaching centres.

15. Seen in that light, there can be no doubt whatsoever that the actiof the petitioner are very much regulated by the Act and the Rules aforesaid and the instructions/regulations issued thereunder from time to time.

The Delhi High Court concluded as follows:

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 a Court of law. The inference can only be one, that the Course Completion Certificate/training offered by such Institutes is recognized by law.

26...........

27...........

28. We are therefore of the view that the Instruction aforesaid holding the petitioner to be assessable to Service Tax is contrary to Section 65(27) and the Notification dated 25th April, 2011. Accordingly the said Instruction and the show cause notices given to the petitioner are quashed. The Rule is made absolute and the writ petition is disposed of.

Learned counsel appearing for the 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.

The appeal is, accordingly, dismissed.

it is matter of common knowledge and well established in erstwhile service tax regime that process of obtaining commercial pilot lisence is strictly regulated by the DGCA (Direcor general of civil aviation) and thus recognised by law. All these process is very well explained in Indian institute of Aircraft engineering by Delhi High court. readers may be benefited from there.

In essence, the flight training academies/ pilot training Center does qualify as educational institution as t they are providing services by way of coaching or training which is, considering the wide scope of terms education as explained by Hon'ble Supreme court, qualifies as education, as such education is for obtaining a qualification recognised by law i..e commercial pilot license given by DGCA after passing their exam and other test.

I am of the view that training and coaching provided by flight training institutes are exempted from GST.

it may be noted that words commercial training or coaching has not been used in GST. Hence there is no point in discussing whether any activity of imparting knowledge would qualify as coaching or training or education. any service provided by an educational institution shall be exempted and to qualify as an educational institution, such institution must provide education (which could be either pure theoretical knowledge or practical knowledge ore even training in some sport) which is part of the curriculam for obtainining a qualification recognised by law for the time being in force. it may gains be noted that under GST they do not words a degree diploma certificate but qualification which is wider in nature and very well covered commercial pilot license.

services

[Alkesh Jani]

Sir,

I welcome the opinion expressed by Sh. Akash Deep ji, but the views expressed by him refer to Sl.No. 66 of the said Notification, and definition of “educational institute” given at the end of the Notification also decision quoted are of erstwhile law, It is to prove that “commercial pilot” training is “education as a part of a curriculum for obtaining a qualification recognised by law for the time being in force”.

Moreover, Sl.No.66 refers to HSN code 9992 for educational institute, however, the Commercial pilot training can be classify under HSN Code 999293, (Commercial training and coaching services).

Further, the Section clearly mentions “taxable services namely” (imparting training)therefore, the decisions of erstwhile law, may not be of help as the definitions has been changed in the GST law along with its classification, which warrants for fresh review by Courts. The views expressed by Sh. Akash Deep ji, may be accepted in future if, circular is issued by the Government or Courts gives their verdicts.

In view of above, I stand to my views expressed earlier.

Thanks,