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TMI Blog2012 (7) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... mpletion of the training by the appellant, the trainee can not seek any employment or undertake self-employment directly after such training or coaching. - Therefore, prima facie we are of the view that the appellant is not eligible for the benefit under the aforesaid exemption. Applicability of Ruling of AAR in another issues - held that:- the status of AAR is higher than that of this Tribunal and therefore, this Tribunal cannot ignore the ruling by the AAR in a case where the facts are similar/identical and the questions of law are identical. Overhauling work of the aircrafts - held that:- prima facie, the activity of overhauling for a consideration comes under the purview of "management, maintenance or repair service" and is liable to service tax. Part per-deposit ordered. - ST/94/2012 - S/708/2012/CSTB/C-I - Dated:- 7-6-2012 - Ashok Jindal, P R Chandrasekharan, JJ. For Appellant: Mr Yogesh Patki, Adv. For Respondent: Mr Y K Agarwal, Additional Commissioner (AR) Per: P R Chandrasekharan: This appeal and stay application are directed against Order-in-Original No. 20-23/ST-II/WLH/2011 dated 30-11-2011 passed by the Commissioner of Service Tax, Mumbai-II ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r alia stipulates that applicants for licences and ratings shall produce proof of having acquired the flying experience and having passed satisfactorily the test and examinations specified in Schedule II in respect of the licence or rating concerned. Rule 133B deals with "approved organization" by the Director General Civil Aviation and such approved organizations are training schools which carry out training apart from maintenance and overhaul of aircraft components. The appellant being an approved organization conducts training courses in 1) Aircraft maintenance Engineering (AME) and 2) Flying school. 3.3 The AME course is of 3 year duration and comprises of 6 semesters. After completion of training, the students are eligible to appear for the examination conducted by the DGCA. After completion of 3 years, the appellant issues a course completion certificate. In order to get the AME licence, the student has to pass the DGCA examination and viva thereafter. For this student has to undergo one year practical training with the appellant. 3.4 Any student who wants to obtain a private pilot licence from DGCA has to undergo 4 months training with the appellant and has to train by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Society vs. UOI reported in 2006 (1) STR 481 had held that courses for training students to appear in examination conducted by an organization under the control of Ministry of Communication and Information Technology would be a course recognized by law and the appellant's case is similar to the said case. Hence the appellant is not liable to service tax. 3.9 Demand for service tax under the category of "management maintenance or repair" for the overhauling of aircrafts of its members is bad in law as the said service is not provided under a contract or agreement. The memorandum of the appellant's company wherein they have undertaken to provide the said service to its members is not a contract or agreement. 3.10 The appellant relies on the judgment of this Tribunal in the case of Gujarat Flying Club vs. CCE, Vadodara decided on 21-3-2012 vide order No. S/457/WZB/AHD/2012 wherein in identical circumstances, this Tribunal had granted stay. The said order, though not a binding precedent, has to be followed to maintain consistency of approach and uniformity in the exercise of judicial discretion as held by the hon'ble Supreme Court in Vishnu Traders vs. State of Haryana and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under the Finance Act, 1994 in respect of the taxable services involved in the matter. With respect to commercial training or coaching, the taxable service was defined under clause (zzc) of section 65(105) as follows:- "any service provided to any person, by a commercial training or coaching centre in relation to commercial training or coaching". Section 65(26) and 65(27) defined the relevant terms as follows:- (26) "commercial training or coaching" means any training or coaching provided by a commercial training or coaching centre". (27) "commercial training or coaching centre" means any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field other than sports, with or without issuance of a certificate and includes coaching or tutorial classes but does not include pre-school coaching and training centre or any institute or establishment which issues any certificate or diploma or degree or any educations qualification recognized by law for the time being in force.' 5.2 The first issue to be considered is whether the appellant falls under the exclusion clause of the definition, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o seek employment or undertake self-employment directly after such training or coaching; (ii) "recreational training institute" means a commercial training or coaching centre which provides training or coaching relational to recreational activities such as dance, singing, martial artsw or hobbies. The terms "vocational training institute" used in the notification was amended as follows vide notification 3/2010-ST dated 27-2-2010,- (i) "vocational training institute" means an industrial training institute or an industrial training centre affiliated to the National Council for Vocational Training, offering courses in designated trades as notified under the Apprentices Act, 1951.' 5.4 From the records it is seen that on completion of the training by the appellant, the trainee can not seek any employment or undertake self-employment directly after such training or coaching. The trainee needs to successfully complete the examination and viva voce conducted by the DGCA to obtain the appropriate licence under the Aircraft Act or the rules thereunder before seeking employment or undertaking self employment. Thus the appellant does not satisfy the definition of vocationa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of whether the venture is profit making, loss making or charity oriented' in its motive or outcome. The word "commercial" used in the phrase is with reference to the activity of training or coaching and not to the nature or activity of the institute providing the training or coaching. Thus, services provided by all institutes or establishments, which fulfills the requirements of definition, are leviable to service tax." 5.6 The CBEC had once again considered the leviability of service tax on the Flying Training Schools and Aircraft Maintenance Engineering Institutes and issued clarification vide circular F.No. 137/132/2010 Service Tax dated 11 th May, 2011. In the said circular, it was clarified that the training imparted by the aforesaid institutions can not be considered as courses recognized by law as the institutes are not created or recognized by the law. It was also clarified that the training programmes conducted by these institutes will not be eligible for the benefit of service tax exemption under notification 24/2004-ST as the institute courses do not directly enable the trainee getting the requisite employment. 5.7 We are well aware that these instructions issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceive training from CFTI would be subjected to examination 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 personal circumstances, therefore, the Certificate of Course Completion issued by CFTI can not be 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 approved examiner for the purpose of evaluating the experience and content of training, will not make it statutory in character. On this reasoning, the AAR held that the CFTI can not be considered as an institute or establishment excluded from the definition of "commercial training or coaching centre" under clause (27) of section 65 of the Finance Act, 1994. As regards the second issue, the AAR made the following observations:- "22. The issue is 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er in the light of the clarification given by the Board or ruling of AAR. Therefore, the said decision cannot be cited as binding precedent. Further it is a well accepted principle that interim orders do not have any binding precedent value. 5.11 The next issue for consideration is whether the overhauling work of the aircrafts undertaken by the appellant for its members can be levied to service tax under the category of "management, maintenance or repair" service. The appellant's contention is that there is no written contract or agreement with the members in this regard and therefore, in the absence of such an agreement or contract, their activity is not leviable to service tax. Section 65 (64) defines the taxable service as follows:- "management, maintenance or repair" means any service provided by (i) any person under a contract or an agreement; or (ii) a manufacturer or any person authorized by him, in relation to,- (a) management of properties, whether immovable or not; (b) maintenance or repair of properties whether immovable or not; or (c) maintenance or repair including reconditioning or restoration, or servicing of any goods, excluding a mot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e principles governing stay application. The hon'ble High Court held as follows: "Petitions for stay should not be disposed of in a routine manner unmindful of the consequence flowing from the order requiring the assessee to deposit full or part of the demand. There can be no rule of universal application in such matters, and the order has to be passed keeping in view the factual scenario involved. The petitioner has no absolute right of say." The hon'ble High Court further held that: "(1) Three aspects to be focused while dealing with the applications for dispensing of pre-deposit are: a) prima facie case, b) balance of convenience, and c) irreparable loss. (2) Interim orders ought not be granted merely because a prima facie case has been shown; (3) The balance of convenience must be clearly in favour of making of an interim order and there should not be the slightest indication of a likelihood of prejudice to the interest of public revenue; (4) While dealing with the applications, the twin requirements of consideration, i.e. consideration of undue hardship, and imposition of conditions to safeguard the interest of revenue must be kept in view; (5) Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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