[2014] 46 taxmann.com 305 (Allahabad) CCEST vs. Garg Aviations Ltd.

Facts:
Assessee provided training and coaching to individuals for flying of aircraft for obtaining Commercial Pilot License (CPL) from Director General Civil Aviation (DGCA). Assessee was also engaged in providing training for obtaining Basic Aircraft Maintenance Engineering Licence (BAMEL). Department demanded service tax under Commercial Training or Coaching Services. The Tribunal, in view of the decision of the Delhi High Court in Indian Institute of Aircraft Engg. vs. Union of India [2013] 34 taxmann.com 191 concluded that service tax could not be levied on the assessee. Aggrieved, revenue filed appeal before Hon’ble High Court.

Held:
The Hon’ble Allahabad High Court concurred with the decision of the Hon’ble Delhi High Court (supra) on following grounds and dismissed Revenue’s Appeal:

(i) “Commercial training or coaching centre” defined during the relevant period in section 65(27) of the Act excluded from its domain “any institute or establishment which issues any certificate or diploma or degree or any educational qualification recognized by law for the time being in force”. This clause was omitted with effect from 01-05- 2011 from the definition and included by exemption Notification No. 33/2011-ST, dated 25-04-2011. The Delhi High Court expressed a view that, the only plausible reason for exempting from payment of service tax those training or coaching centres, even though commercial, whose certificate/degree/ diploma/qualification is recognised by law, can be to exclude from the ambit of service tax those training or coaching centres which are otherwise regulated by any law inasmuch 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.

(ii) I t was observed that that, when institute is approved by DGCA, its activities are very much regulated by the Aircraft Act, 1934, Aircraft Rules, 1937 and Civil Aviation Requirements (CAR) and the instructions/ regulations issued there under from time to time. 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. Based on the observations of Hon’ble Delhi High Court, the Allahabad High Court held that, training and coaching for flying of aircraft for obtaining CPL from DGCA and training for obtaining BAMEL license are not liable as they are qualifications recognised by law.