Flying schools reel under service tax shocker

Mumabi: In the last several months, flying schools across India have suddenly started receiving notices from the service tax department demanding crores in taxes with retrospective effect from 2003. With the industry still reeling under the shock of the financial slowdown, the tax notices could send smaller flying clubs towards certain death even as larger ones explore the option of moving abroad. At the crux of the controversy is the issue of whether flying schools fall under the Commercial Coaching and Training Centre (CCTC) category and hence attract service tax. The schools maintain that since they give out certificates and licences, they are not CCTCs.
The Bombay Flying Club (BFC) has been slapped with a bill of Rs 1.2 crore, while Yash Air limited (YAL), based in Ujjain, has been burdened with a Rs 7-crore bill.
In the last few months, the Raipur-based Touchwood Aviation Academy and the Kolkata-based Camellia Institute of Aviation have shut down, while others have scaled down their development plans. A couple of schools have started exploring options to move abroad.
17/05/10 Manju V/Times of India

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