The Karnataka Authority for Advance Ruling (AAR) in the case of M/s CAE Flight Training (India) Private Limited vide Advance Ruling No. KAR ADRG 13/2023 dated 20.03.2023, has held that the supply of aircraft-type rating training to the commercial pilots, for obtaining the extension of aircraft type ratings on their existing licenses, do not result in qualification and are eligible for GST.

In this case, the applicant is a Directorate General of Civil Aviation (DGCA)-approved training organization (ATO) engaged in the business of providing type rating training on simulators for various fleets of aircraft to trainees aspiring to obtain licenses and ratings from the DGCA. The flight training services imparted by the applicant (ATO) enhance the skills and knowledge of trainees.

The Applicant provides both classroom-based and cockpit-based training about the operations of aircraft. The training includes both dry and wet training. Dry training is training on the simulator, in which the person undergoing training is able to obtain to undertake the necessary simulation exercises on his own accord. The dry training is to be undergone by all pilots for a minimum of eight hours over a period of six months on a regular basis.

On the other hand, wet training is a 35-day type rating training session, in which classroom, as well as cockpit training, is provided by the applicant's trainers.

The applicant is currently engaged in providing dry training to Commercial Pilot License (CPL) holders from various airlines, who have already been type-rated for specific aircraft. Under dry training, airline companies are granted the right to use the full flight simulators for scheduled hours, with their pilots training under the guidance of the airline company’s own instructors.

The applicant sought an advance ruling on the issue of whether the supply of aircraft type rating training services to commercial pilots in accordance with the training curriculum approved by the Directorate General of Civil Aviation for obtaining the extension of aircraft type ratings on their existing licenses would be exempt from the levy of Central Goods and Service Tax and Karnataka Goods and Service Tax.

The applicant also referred to Circular No. 117/36/2019-GST, dated October 11, 2019. The circular clarifies the applicability of GST exemption to the DG Shipping approved maritime courses conducted by Maritime Training Institutes of India to the effect that the Maritime Training Institutes and their training courses are approved by the Director General of Shipping and are recognized under the provisions of the Merchant Shipping Act, 1958, read with the Merchant Shipping (standards of training, certification, and watch-keeping for seafarers) Rules, 2014, and thus the institutes are educational institutions.

The AAR has observed that the supply of aircraft type rating training services to commercial pilots, in accordance with the training curriculum approved by the Directorate General of Civil Aviation for obtaining the extension of aircraft type ratings on their existing licenses, does not result in a qualification as the applicant imparts training and issues only a course completion certificate, and thus the impugned services are not covered under SI No. 66(a) of the Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017, and thus are exigible to GST.

The AAR held that the Aircraft Act and the Aircraft Rules did not approve the applicant institute for the conduct of an examination that yields a qualification, but only to issue a course completion certificate, which is useful only as one of the enclosures to file the application for the Type Rating examination conducted by the DGCA. Further, there is no circular applicable to the type of rating training being given by the applicant, and thus the circular dated 10.11.2019 relevant to shipping courses is not applicable.