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TMI Blog2010 (2) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 - AAR/ST/ 01/2010 - - - Dated:- 4-2-2010 - Present: Mr. Justice P.V.Reddi, Mr. J.K.Batra, Mr. J. Khosla, JJ. Present for the Commissioner concerned : Shri B.K.Singh Jt. CDR Shri Sumeet Kumar, SDR RULING (By Mr J.K.Batra) M/s CAE Flight Training (India) Pvt. Ltd., Bangalore, (hereinafte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first batch of pilots and the course was yet to be completed when the application for Advance Ruling was made before the Authority on 26th June, 2009. The Commercial Pilot s Licence holders intending to undergo aircraft-specific type rating training approach CFTI either directly on their own or through the airlines with whom they are employed (on stipend basis as trainee or otherwise). CFTI has been approved by the Directorate General of Civil Aviation (DGCA) on a provisional basis to conduct aircraft-specific type rating training courses for B737 A320 aircraft subject to certain conditions. CFTI has claimed that once the trainee pilots have completed the type rating training with it they will be issued a Certificate of Course Completion by CFTI which must be produced under the terms of para 5 of Section J Schedule II of the Aircraft Rules, 1937. 5. Based on the aforesaid facts the applicant has sought a ruling on the following questions, namely:- 1.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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any educational qualification; and (b) such a testimonial should be recognized by law for the time being in force. CFTI has claimed that the certificate of course completion proposed to be issued by it would squarely fulfill the requirements of the exclusion clause of the definition of a commercial training and coaching centre and consequently keep it out of the scope of levy of service tax for the type rating training provided by it. In this behalf it has adduced the following arguments: (a) 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. The DGCA through the Civil Aviation Requirement (CAR) document lays down the minimum requirement relating to the infrastructure, procedure and manpower for the grant of approval for undertaking flying training activities. The CAR is issued under Rule 133 A of the Aircraft Rules, 1937. The CAR for approval of Flying Training Institute vide Section 7 Flight Crew Standards, Training and Licensing, Series D, Part I dated 15th July, 1999 prescribes the necessary requirements that a training institute shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re required to be carried out by the DGCA approved examiner but who would be an employee of CFTI. CFTI shall provide the course completion certificate to the trainees based on the comments given by the DGCA approved examiner (CFTI employee). 9. CFTI has stated that in view of the aforesaid legal requirements, each CPL holder must undergo such type rating training and get the endorsement in his Commercial Pilot s Licence so as to be able to fly specific aircrafts. Therefore, the issuance of a Certificate of Course Completion by CFTI can be said to be recognized by law presently in force. Thus, CFTI submits that it is clearly excluded from the definition of a commercial training and coaching center as defined by Section 65(27) of the Finance Act, 1994. 10. The claim of the applicant has been contested by the revenue authorities. Revenue has pointed out that a certificate/diploma cannot be called as one recognized by law unless statutory authorities such as University Grants Commission(UGC), All India Council for Technical Education(AICTE) etc. have specifically recognized such a diploma or a certificate. Consequently the Course Completion Certificate issued by CFTI cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the form. It is observed that the documents required to be enclosed are to be certified / signed by approved examiner . The instructions do not require these documents to be certified by the training institutes/establishment. The Authority accordingly requested the applicant to furnish a reply to the following queries.- 1. Whether as per pro-forma of the application prescribed by DGCA for extension of Aircraft Rating under paragraph 5 of Section J of Schedule II of the Aircraft Rules, 1937, the certificate of the Type Rating Training Organization is required to be furnished as an enclosure? If so, under which serial number of the application or the list of enclosure has such a requirement been specified? 2. Is there any list of approved examiner by DGCA for the purpose of the Aircraft Rules, 1937? In reply to the first query the applicant has stated that the certificate issued by it is required to be attached along with the application form for extension of type rating. In this context the applicant has referred to Serial No. 16(I) of the instructions to the applicants for filling up the form. The said entry reads as under- 16 LIST OF ENCLOSURES :- The f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of the Aircraft Act and/or the Aircraft Rules, then the said certificate will satisfy the condition of having been recognized by law for the time being in force. 13. As noted above the question of recognition revolves around the certificate of course completion issued by CFTI. As per the text of the certificate proposed to be issued by CFTI and enclosed with the application for Advance Ruling, CFTI would certify as follows: This is to certify that the above named pilot has successfully completed a Type Rating Course in respect of .on and the application is now made for the grant of the Aircraft Rating . The certificate then provides the course details such as Ground Training, Avionic Training, Full Flight Simulator Training, Licence Skill Test. Finally the certificate carries the following endorsement - All the items of the Form GFT (MPA) (Application for a Multi-Pilot Aeroplane Type Rating Skill Test for DGCA Licenses) have been completed. As may be observed this is not the certificate in the conventional sense wherein the Issuing Authority formally recognizes a particular person as possessing certain qualification or meeting certain stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dule II of the Aircraft Rules, 1937 which specifies the evidence required to be produced by an applicant for extension of Aircraft Rating. The said provision requires the applicant to produce evidence of having passed written examination in subjects pertaining to aircraft and engines and of having gained experience in flying the aircraft or on approved flight simulators etc. The DGCA, the authority competent in law to endorse aircraft ratings in the licence of the pilots has prescribed an application form and has also specified the documents to be enclosed with the form to satisfy itself that the evidence required in para 5 of the said Section J, Schedule II of the Aircraft Rules, 1937 for extension of aircraft ratings has been produced. From the format of the application form, it is noted that in the main form, there is no entry requiring a mention of the institute from where the applicant may have undergone training. There is a column for sponsoring authority (Serial No. 12) wherein as per the instructions, the name of the training institute could be specified. In the list of enclosures specified at Serial No. 16 on page 2 of the Instructions to applicants for filling the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, that situation does not exist. Further as per the clarification given by DGCA to the Revenue, the candidates trained by CFTI would for the present be examined by DGCA approved examiners and not CFTI. This clarification appears to be in consonance with the rule position. Thus, the applicant CFTI s certificate is still some distance away from attaining recognition under the Rules and therefore cannot be covered by the exclusion under Section 65 (27) of the Finance Act, 1994. 18. Taking all the aspects into consideration it is noted that CFTI has been given, as on date, a provisional approval for conducting Type Rating Courses. The candidates who receive training from CFTI would be subjected to examination/test by DGCA approved examiners. 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. The fact that such a certificate may be taken into account by the DGCA - approve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Notification No. 24/2004 supra. The Revenue has taken the stand that the pilots after undergoing training with CFTI will not be able to seek employment directly after such training or coaching and hence CFTI is not covered by the definition of vocational training institute as given in the notification. 22. The issue to be considered is whether the Type Rating Training by CFTI enables the trainee to seek employment or undertake self-employment directly after such training or coaching. It is important to note that only in cases where trainee can seek employment directly after the training can the institute be considered to be covered by the exemption. From the facts placed before us it is noted that as per Rule 6 A of the Aircraft Rules, no person shall fly as pilot of an aircraft which is not included or entered in the Aircraft Rating of the Licence. Thus a person can fly an aircraft and consequently seek employment with an Airlines company only after his licence has been endorsed with the aircraft rating for the said aircraft by the DGCA. Merely undergoing training with a TRTO without endorsement of the licence by a competent authority will not enable a pilot to fly an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitute of Chartered Financial Analysts of India vs. CC CE, Hyderabad-II 3, and (iii) Magnus Society vs. CC CE, Hyderabad 4. In all these cases it was held that the institutions engaged in advanced research and imparting education as per the syllabus 2 2009 (14) S.T.R. 165 (Tri.-Bang.) 3 2009 (14) S.T.R. 220 (Tri.-Bang.)4 2009 (13) S.T.R. 509 (Tri-Bang.) prescribed by a University cannot be considered to be commercial training or coaching centres . We do not see how the ratio of these decisions can come to the aid of the applicant. 25. In view of the above discussion, the ruling with reference to the questions raised in the application is given as follows:- Question No.1 : The question is answered in negative. 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. It is however, made clear that this ruling has been given in the context of the facts presently before the Authority and in the light of Rules now existing. Question No.2: CFTI cannot be considered as a vocational training institute for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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