(UNI) The Delhi High Court held that Aircraft Engineering Institutes which awards licences to those aircraft which qualify maintenance standards do not come under the ambit of Service Tax.
A bench comprising Chief Justice D Murugesan and Justice Rajiv Sahai Endlaw quashed the show cause notice issued by the service tax department to the Indian Institute of Aircraft Engineering demanding service tax from the institute. While quashing the notice issued by the service tax department, the bench held that holding IIE to be assessable to Service Tax is contrary to section 65(27) of the Finance Act and against the and the Notification dated April 25, 2011.
The Court orders came on a petition filed by IIE against the service tax demand notice issued to them by the Central Board of Excise and Customs(CBEC) on May 11, 2011.
The CBEC demanded the service tax saying that flying institutes and aircraft engineering institutes which offerย basic aircraft maintenance engineering license(BAMEL) and commercial pilot licenses come under the category of coaching institutes as described under the Finance Act and are assessable to Service Tax.
CBEC pleaded that the commercial training or coaching services were listed under the Service Tax with effect to July 1, 2003.
The IIE said it cannot be made to pay Service tax such as coaching centres as the certificate is approved by Director General of Civil Aviation.
The IIE further said that the recognition granted to it by the Aircraft Act, Rules and Civil Aviation Requirements(CAR) are after the completion of the course is issued by and does not automatically let the holder of such qualification to certify the repair, maintenance or airworthiness of an aircraft and for which authorisation a further examination to be conducted by the DGCA has to be passed/cleared, it said. The HC said training and the subsequent Course Completion Certificates awarded by such institutes to students are recognised by law and hence, the institute is exempted from Service Tax HC held.
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