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TMI Blog2023 (3) TMI 1115X X X X Extracts X X X X X X X X Extracts X X X X ..... entry number 66(a) of Notification 12/2017 supra. Educational institution , for the purpose of this notification means an institution providing services by way of education as a part of a curriculum for obtaining a qualification recognized by law for the time being in force. Therefore an institution becomes an Educational institution only when the services provided by them are (i) part of a curriculum, (ii) the services yield a qualification and (iii) the said qualification must be recognized by law for the time being in force. It is observed from the facts of the case that the applicant undertakes the supply of the ATR extension training services to their trainees as per the agreement. The pilots holding the CPL(A) have to undergo the ATR extension training for the specific type of aircraft(s) so as to fly the said aircraft with the commercial airlines. Thus they approach the applicant either directly on their own or through the airlines with whom they are employed (on stipend basis as trainee or otherwise). The applicant institute is approved by the DGCA to conduct aircraft specific type rating training courses, as per the curriculum approved by the DGCA. The applicant issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and thus the said institutes are educational institutions. It is observed that the said institutes are empowered to impart training and certification of the said training in terms of Merchant Shipping Act, 1958 read with relevant rules, whereas in the instant case the Aircraft Act and the Aircraft rules did not approve the applicant institute for conduction of examination that yields to a qualification, but only to issue course completion certificate which is useful only as one of the enclosure to file the application for the Type Rating examination conducted by the DGCA. Further, there is no circular applicable to the said Type Rating training, being given by the applicant and thus the Circular dated 11.10.2019 relevant to Shipping courses is not applicant to the instant case. Therefore the impugned services of the applicant are not covered under entry number 66(a) of the Notification 12/2017-Central Tax (Rate) dated 28-06-2017, as amended and hence do not qualify for exemption. Thus the said services are exigible to GST. - DR. M.P.RAVI PRASAD AND SRI. KIRAN REDDY T MEMBER Represented by Sri. Syed M Peeran, Advocate Authorised Representative ORDER UNDER SECT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roviding simulation and modeling technologies and integrated training solutions for the civil aviation industry, defense forces and healthcare around the globe. CAE Inc. was founded in 1947 and is headquartered in Montreal, Canada. CAE Inc. has the broadest global reach of any simulation and training equipment and services company in the market. 5.2 CAE provides both classroom-based training about the operations of aircraft and cockpit-based training. The training includes both dry as well as wet training. Dry training is training on the simulator, wherein the person undergoing training is able to obtain usage time on the simulator, in order to undertake the necessary simulation exercises on his own accord. Such dry training is to be undergone by all pilots for a minimum of eight hours during a period of six months on a regular basis. On the other hand, wet training is a 35-day type rating training session, wherein classroom as well as cockpit training is provided by CAE s trainers. 5.3 CAE is currently engaged in providing dry training to the Commercial Pilot License ( CPL ) holders from various airlines, who have already been type rated for specific aircraft. Under dry trai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Aircraft Rules provides that a licence shall indicate the types of aeroplane the holder is entitled to fly in the form of aircraft rating, and sub-section 5 provides for the extension of such aircraft rating to include an additional type of aeroplane in their license, and in order to extend such aircraft rating, the pilot has to make an application to the DGCA for an endorsement in respect of their license. 5.11 For making an application for the extension of ATR, the following documents need to be submitted by the applicant:- a. Duly certified log book of the applicant; b. Duly certified training progress statement; c. Duly certified ATR skill test report; d. Duly certified Form CA-39, for the preceding six months and for the preceding 12 months. Sample copies of the documents specified above have been collectively enclosed as Annexure-2. 5.12 The training provided for the extension of ATR can be undertaken only at training organisations approved by the DGCA, and the documents referred to above have to be issued by such an organisation. 5.13 Against this background, it is noted that CAE also operates an ATO in Bengaluru, Karnataka wherein they a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n goods, money and securities, which provides a wide scope for the term services under the GST law. 6.5 Furthermore, the definition of business under Section 2(17) states that this term includes any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit . Taxability 6.6 Thereafter, in order to determine the taxability of the said services, reference has to be made to the SAC 999294 under the Explanatory Notes to the Scheme of Classification of Services (hereinafter referred to as Explanatory Notes ), which has been reproduced hereunder:- 999294 Other education and training services n.e.c. This service code includes: i. training for car, bus, lorry and motorcycle driving licences ii. training for flying certificates and ship licences iii. computer training services iv. management training services v. services provided by music camps, science camps, computer camps and other instructional camps, except for sports vi. education services not definable by level This service code does not include: - services related to literacy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply has been defined as the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary . Applicability of Legal Provisions Supply of services 6.13 As already stated, the Applicant is an ATO, which is providing ATR extension training to their trainees for obtaining various licenses and ratings issued by the DGCA. 6.14 With reference to the scope of supply under Section 7(l)(a) of the CGST Act and the definition of services under Section 2(102), as discussed hereinabove, the ATR extension training provided by the Applicant can be covered in the ambit of services, and if such services are provided by the Applicant in exchange for the fees payable by the trainees, the same is being made for consideration, as required under Section 7(1)(a). 6.15 With reference to the definition of business under Section 2(17), since a commercial activity is being undertaken by the Applicant in the instant case, it is submitted that the Applicant is providing the training services in the course or furtherance of business. 6.16 Thus, it is clear that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een defined as qualities, accomplishments, etc. which qualify a person for some office or function. 6.23 Further, the Black s Law Dictionary (Sixth Ed.) defines qualification as the possession by an individual of the qualities, properties, or circumstances, natural or adventitious, which are inherently or legally necessary to render him eligible to fill an office or to perform public duty or office . 6.24 From these definitions, it is clear that in the legal parlance, qualifications do not refer to the mere possession of degrees, diplomas, etc., but the possession of skills, accomplishments, etc. which have been acquired through training or education, and which confer upon a person the ability to undertake a particular profession or pursuit. 6.25 In the present case, it is submitted that the qualification being referred to is the completion of the training programme offered by the Applicant, where the flying experience required for applying for an ATR extension in terms of Schedule II to the Aircraft Rules is acquired, thereby leading the trainees to become qualified to appear for the examination conducted by the DGCA and apply for a license, enabling them to purs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar license before embarking upon the training provided by them, (iii) the stages of training provided in the institute, and (iv) the application that has to be made for the extension of ATR, for which documents issued and certified by the Applicant will be a requirement. 6.32 Rule 6 of the Aircraft Rules, 1937 provides that every aircraft shall carry and be operated by licensed personnel, as provided in Part V read with Schedule II to the said Rules. Further, Rule 6A provides that no person shall fly as pilot of an aircraft, which is not included in the aircraft rating of his license. 6.33 Furthermore, Rule 41 of the said Aircraft Rules provides that the 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. 6.34 Thus, with reference to Rule 133B read with sub-sections 4 and 5 of Section J of Schedule II to the Aircraft Rules, it is clear that the CPL(A) specifies the rating of the types of aircraft that the pilot is entitled to fly, and in order to add such additional ATRs to the license, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the DGCA, and further approved by the DGCA, as a part of their TPM. 6.40 Further, on reading of the Aircraft Rules in conjunction with the ATO CAR and the ATR extension application form, it is clear that the documents issued by the ATO are required for submission along with such application. 6.41 In light of the above submissions, firstly, it is submitted that the completion of the training programme with the Applicant in accordance with the Aircraft Act, the Aircraft Rules, the ATO CAR and the Applicant s TPM is in the nature of a qualification, recognised by any law for the time being in force , since,- (i) the completion of such ATR extension training in accordance with the syllabus approved by the DGCA is recognised under the powers granted by the Aircraft Act, the Aircraft Rules and the ATO CAR, i.e. they are recognised by the law, and (ii) the completion of the ATR extension training and acquiring the requisite competency from a ATO are requirements for a person to work make an application to obtain an extension of ATR, which is required for such person to be employed as a pilot with any commercial airlines. 6.42 Secondly, the syllabus/training program ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice 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 activities of the petitioner are very much regulated by the Act and the Rules aforesaid and the instructions/regulations issued thereunder from time to time. 16. An analysis of the counter affidavit of the DGCA as set-out hereinabove would show that, (i) an institute as the petitioner cannot be set-up without the approval of the DGCA; (ii) detailed requirements for approval have been made out in CAR Section 2, Series E Part VII; (iii) such approval is given only after the institution satisfies DGCA that it has the facilities, equipments, training aids, faculty, library ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utes and having laid down conditions for grant of such approval and having further provided for relaxation of one gear 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. ... 27. The reasoning in the impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have been effectively vacated. 6.55 This decision has been followed by various High Courts in the case of Commissioner of Customs Central Excise v. MP Flying Club Ltd., 2014 (8) TMI 1182 - MADHYA PRADESH HIGH COURT, and in the case of Commissioner of Central Excise, Customs Service Tax v. Garg Aviations Ltd., 2014 (35) S.T.R. 441 (All). 6.56 In the latter case, the appellant was providing both flying training and AME training, and the Allahabad High Court has followed the reasoning in Indian Institute of Aircraft Engineering (supra) and held that such training services would not be leviable to Service Tax. 6.57 Applying the ratio and reasoning of the Delhi High Court in the case of Indian Institute of Aircraft Engineering (supra), as well as of the Allahabad High Court in the case of Garg Aviations (supra), it can be said that completing the training programme offered by the Applicant will, in itself, be considered as a qualification recognised under the law, and therefore, no GST would be chargeable on such training services provided. 6.58 In the context of the GST law, reference can also be made to the Circular No. 117/36/2019-GST dated 11.10.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of a curriculum for obtaining a qualification recognised by the law 6.62 Without prejudice to the above submissions, it is submitted that alternatively, the completion of the flying training course offered by the Applicant is in the nature of education as a part of a curriculum for obtaining a qualification recognized by the existing law, i.e. the endorsement on the CPL(A) by the DGCA in respect of the ATR extension achieved by the pilot. 6.63 In this regard, reference can be made to the ST Instruction, which clarified that the licenses issued by the DGCA are in the nature of a qualification recognised by the law. 6.64 Further reference can be made to the case of Academy of Maritime Education, and Training Trust v. Commissioner of Service Tax, 2014 (36) S.T.R. 1216 (Mad.), wherein the Madras High Court has relied upon the decision of the CESTAT in Bombay Flying Club v. Commissioner of Service Tax, Mumbai, 2013 (29) S.T.R. 156 (Tri.-Mumbai), where the Tribunal held that the license issued by the DGCA is a qualification recognised by the law. 6.65 On the basis of the decision in Bombay Flying Club (supra), it was held by the Madras High Court that the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That the supply is exempt from levy of GST 6.73 Since the Applicant is an educational institution, and on the basis that they are providing services to their trainees, which are in the nature of other education services falling under the ambit of SAC 999294, it is respectfully submitted that such services will be covered under SI. No. 66(a) of the Exemption Notification. 6.74 Consequently, since SI. No. 66(a) of the Exemption Notification provides for an exemption with respect to the services provided by an educational institution to its students, faculty and staff, the training services provided by the Applicant to their trainees will qualify for such exemption, and no GST will be leviable thereon. ISSUES REQUIRING ADVANCE RULING AND APPLICANT S UNDERSTANDING 6.75 In the light of aforementioned submissions, the Applicant seeks a Ruling on the following questions from the Honble AAR, and their interpretation of the questions is elaborated hereunder. 6.76 Question 1: Whether the supply of ATR extension training services provided by the Applicant to their trainees will be taxable or exempt under the GST law? Applicant s Understanding: Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raining for flying certificates ship licences and contends that they qualify to be an Educational Institution and thus their services are exempted in terms of entry No.66(a) of Notification 12/2017-CentralTax (Rate) dated 28.06.2017, as amended. 11. In view of the foregoing, the issue before us to decide is whether the Applicant qualifies to be an educational institution and if so whether they are entitled to the benefit of entry number 66(a) of Notification 12/2017 or not. We observe that the services provided by an educational institution to its students, faculty and staff, covered under heading 9992 or 9963, are exempted unconditionally under entry number 66(a) of Notification 12/2017 supra. Educational institution , for the purpose of this notification means an institution providing services by way of education as a part of a curriculum for obtaining a qualification recognized by law for the time being in force. Therefore an institution becomes an Educational institution only when the services provided by them are (i) part of a curriculum, (ii) the services yield a qualification and (iii) the said qualification must be recognized by law for the time being in force. Thus w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary as acknowledging the existence, validity or legality of something; Honble Supreme Court in the case of Narsingh Pratap Singh Dev Vs State of Orissa AIR 1964 SC 1793 held that a law generally is a body of rules which have been laid down for determining legal rights and legal obligations, which care recognized by the courts; in the case of R S Naik Vs A R Antulay (1984) 2 SCC 183 it was held that the law includes any ordinance by law, rule, regulation, notification, custom or usage having the force of law and basing on the above contended that a qualification recognized by the law refers to any qualification which derives its authorisation from any statute, ordinance, by-law, rule, regulation, notification, custom, usage and so on. 15. The applicant contended that the completion of ATR extension training in accordance with the syllabus approved by the DGCA is recognised under the powers granted by the Aircraft Act, the Aircraft Rules and the ATO CAR, i.e. they are recognised by the law; and that (i) the completion of the ATR extension training and (ii) acquiring the requisite competency from an ATO are requirements for a person to make an application to obtain an exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.2.2010 was given in service tax regime. We observe that the law, under which ruling was given, has changed but the facts and issues raised before the subject authority remains the same i.e. whether the services provided by the applicant is part of a curriculum for obtaining a qualification recognized by any law for the time being in force. Thus we intend to borrow certain facts and inferences from the said ruling. 19. It is learnt that the Director (Training Licencing), DGCA, vide letter dated 17-12-2009 clarified that The certificate issued by CAE Flight Training (India) Pvt. Ltd., Bangalore enables the Commercial Pilot to appear in the written examination conducted by DGCA for issue of Aircraft Type Rating pursuant to the requirement of series J and M of Schedule II of the Aircraft Rules, 1937. However, there is no statutory provision directly requiring issuance of such a certificate by the training organization 20. Further it is also leant that the Chief Flight Operation Inspector, DGCA vide clarification dated 14-12-2009 stated that This is to clarify that the sample course completion certificate will enable the trainee to complete some of the several parame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approved examiner . The instructions do not require these documents to be certified by the training institutes /establishments. 23. The applicant claimed that undergoing Type Rating Training is mandatory as per Rule 6A of the Aircraft Rules, 1937. However, it is observed that the said rule prohibits a person from flying an aircraft as pilot unless the said aircraft is included or entered in his licence. There is no specific mention of training in Rule 6A though the training and passing of the prescribed examination is a step in aid for such aircraft rating. 24. Further, Para 5 of Section J, Schedule II of the Aircraft Rules, 1937 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 fling simulators etc., 25. The applicant claimed that the examination would be conducted by DGCA approved examiner or personnel designated by them in accordance with DGCA proved criteria; the applicant functions as a self contained instit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very clear that the applicant imparts training to the trainees and thus provides ATR extension services. On completion of the said training the applicant issues course completion certificate, which is a pre-requisite document for preferring application before the DGCA, who conducts the examination through an approved examiner and on passing of the said exam the DGCA records the said ATR extension in the CPL of the pilots concerned. Thus the training of the applicant does not result into any qualification and also is not recognized by the law. 29. The applicant placed reliance on the service tax case of Indian Institute of Aircraft Engineering Vs. Union of India 2013 and in the said case the petitioner was an Aircraft Maintenance Engineering Training School, approved by the DGCA, for providing Aircraft Maintenance Engineering (AME) training and. also to conduct examination as per the course approved by the DGCA. These facts are different from the facts of the case at hand in as much that the applicant is not empowered to conduct the examination but imparts training and issues completion certificate, which serves the purpose of a document required for filing the application w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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