Is GST Applicable on DGCA-Approved Commercial Flying Training Organizations? Allahabad HC Remands Case to AAR [Read Order]
The petitioner provided training to commercial pilots for the extension of Aircraft Training Ratings.
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The Allahabad High Court recently remanded a case back to the Authority for Advance Ruling (AAR) to reconsider the question of whether flying training organizations approved by the Director General Civil Aviation (DGCA) that provide training to commercial pilots are liable to Goods and Services Tax (GST), with the direction to consider a new clarification issued by the Ministry of Finance.
The writ petitioner, CAE Simulation Training Private Limited (CAE) is a joint venture between CAE Middle East Holding Ltd. and InterGlobe Enterprises Pvt. Ltd. and is registered with the GST department in Uttar Pradesh.
The petitioner is a Directorate General of Civil Aviation (DGCA) approved training organization that is engaged in providing training to commercial pilots, and provides ground-school instruction as well as simulator-based aircraft type rating (ATR) training on existing commercial pilot licences.
CAE conducts the training as per the DGCA-approved syllabus, and successful trainees are issued completion certificates that are required for endorsement of extended aircraft ratings on their pilot licences.
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The petitioner had earlier approached the Authority for Advance Ruling (AAR) on September 1, 2022 querying whether the training services rendered by them would fall under Serial No. 66(a) of Notification No. 12/2017–Central Tax (Rate) dated June 28, 2017 which exempts educational institutions providing courses leading to a qualification recognized by law.
The AAR passed an unfavourable ruling for the petitioner, which was upheld by the appellate authority as well, leading to the present petition before the High Court.
Atul Gupta and Prakhar Shukla, appearing for the petitioner, relied upon the decision rendered by Delhi High Court in Indian Institute of Aircraft Engineering vs. Union of India (2013) and a decision of the Allahabad High Court in Commissioner of Central Excise, Customs & Service Tax vs. Garg Aviations Ltd. (2014) to argue for the petitioner’s eligibility for GST exemption.
The petitioner further placed reliance on a clarifactory circular issued by Ministry of Finance, Government of India, Department of Revenue on 11.10.2024 to state that DGCA-approved flight training courses conducted by institutions such as CAE are covered under Serial No. 66 of Notification No. 12/2017-Central Tax dated 28.06.2017 and are exempted from GST.
Anoop Trivedi, Arvind Kumar Mishra and Parv Agarwal appearing for the respondents acknowledged the relevance of the clarificatory circular issued by the Ministry of Finance and submitted that the matter be remanded back to the AAR.
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Justice Rohit Ranjan Agarwal noted that the Aircraft Act, 1934 and Aircraft Rules, 1937, empower DGCA to approve training organizations and their courses. The Court further referenced the circular dated October 11, 2024 issued by the Ministry of Finance, which clarified that DGCA-approved flying training courses, where the DGCA mandates completion certificates squarely fall within the ambit of educational institutions under Serial No. 66 of Notification No. 12/2017 and are therefore exempt from GST.
Noting that the AAR and the appellate authority had not considered this clarification, the Court held that it was necessary for the matter to be reconsidered in light of the new circular. Accordingly, the Court set aside both orders and directed the AAR to decide the question afresh within three months from the date of production of the certified copy of the order.
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