The Delhi High Court today held that Service Tax cannot be levied from Aircraft Engineering Institutes which award aircraft maintenance engineering licences.
A bench comprising Chief Justice D Murugesan and Justice Rajiv Sahai Endlaw also quashed show cause notices issued to M/s Indian Institute of Aircraft Engineering (IIAE) demanding Service Tax from the institute.
"We are therefore of the view that the instruction ... holding the petitioner (IIAE) to be assessable to Service Tax is contrary to Section 65(27) (of the the Finance Act) and the Notification dated 25th April, 2011. Accordingly, the said instruction and the show cause notices given to the petitioner are quashed," the court said.
IIAE had moved the court against the Service Tax demand notice issued on May 11, 2011 by the Central Board of Excise and Customs (CBEC).
The CBEC had said that flying training institutes and aircraft engineering institutes which provide commercial pilot licences and basic aircraft maintenance engineering licence (BAMEL) respectively fell under the category of coaching institutes as described under the Finance Act and hence, they are assessable for Service Tax.
CBEC had also said that commercial training or coaching services were brought under Service Tax net with effect from July 01, 2003.
However, IIAE took the plea that it cannot be made to pay Service Tax like other coaching institutes as it issues a certificate approved by the Directorate General of Civil Aviation (DGCA) to successful candidates.
