Whether practical training provided with respect to Aviation liable to service tax under commercial coaching and training service?

PJ/Case Law/2013-14/1703

Case:-RAJIV GANDHI MEMORIAL COLLEGE OF AERONAUTICS VERSUS C.C.E., JAIPUR-I

Citation:-2013(31)S.T.R. 234(Tri.-Del.)

Brief Facts:-This is a stay application filed by M/s. Rajiv Gandhi Memorial College of Aeronautics, Jaipur (applicant) seeking waiver of pre-deposit and stay of recovery of dues adjudged against them.

The brief facts of the case are that the applicant is engaged in providing commercial training or coaching services covered under Section 65(26) ofChapter V of the Finance Act. The applicant is engaged in imparting training to the individuals in the field of Aircraft Maintenance Engineering for obtaining basic licence in the categories of Light Aeroplanes and Piston Engines, to prepare students for appearing in AME Licence Examination conducted by the Director General of Civil Aviation. The department felt that the service provided by the applicant is taxable service and accordingly proceedings were initiated against them demanding Service tax along with interest and also proposing imposition of penalty. Show cause notice was adjudicated on 12-11-2010 in which proceedings against the applicants were dropped by the original authority. Revenue challenged the order-in-original before the Commissioner (Appeals) who vide impugned order had allowed the Revenue's appeal and confirmed the demand along with interest against the applicant and also imposed the penalties against the applicant. The applicant seeks the waiver and stay of recovery against these amounts.

Appellant Contentions:-The appellant submitted that the original authority after considering their submissions has rightly dropped the proceedings against them. He submits that their institute is imparting theoretical/practical training in the Engineering subjects under the supervision of DGCA. The trainees are permitted to appear for the basic Aircraft Maintenance Engineers Licence Examination conducted by Civil Aviation department and therefore service provided by them will not be covered under the taxable service of commercial coaching and training service. He submits that the demand is for the period October, 2004 to February, 2010 which is partly time-barred as there is no suppression of the fact and since there was no suppression no penalty is imposable on them. He therefore submits that they have a strong case for waiver of pre-deposit.

Respondent Contention:-The respondent submitted that service provided by them is taxable service under Section 65(26) of the Finance Act and lower appellate authority has rightly confirmed the demand against the applicant. He submits that the original authority has wrongly dropped the proceedings and Commissioner after reviewing order directed the Additional Commissioner to file the appeal before the Commissioner (Appeals) who has rightly allowed the Revenue's appeal.

Reasoning of Judgment:-We have considered the submission from both the parties and perused the record, we find that the commercial and coaching centre has been defined under Section 65(27) of the Finance Act and it excludes the institute or establishments from the levy of Service tax which were engaged in providing pre-school coaching and training or the centre or 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. The applicants are not issuing any certificate/diploma/degree. They are only providing the coaching and training in the area of aircraft maintenance and training is only for the practical experience.Prima facie we are of the view that the applicant does not fall under the exclusion category of the services. We are therefore of the viewthat the applicant does not have a case for complete waiver of pre-deposit. We direct the applicant to deposit Rs. 6.00 lakhs (Rupees six lakhs) as a pre-deposit within six weeks and report compliance on 12-3-2013. On due compliance, there shall be stay of recovery against the balance amount of tax, interest and penalties till disposal of the appeal.

Decision:-Stay partly granted

Comment:-The essence of this case is that the providing coaching and training in the area of aircraft maintenance is not covered by the exclusion clause of the definition of commercial and coaching centre and so prima facie, the appellant are liable to pay service tax on the training services provided by them.

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PJ/Case Law/2013-14/1703

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