2026 PLP (Trib (PTD)

ALIA ANWER, MEMBER JUDICIAL.

The appellant has assailed the order dated 18.01.2023 vide Order-in-Appeal (hereinafter referred to as "the first Appellate Order") No.20/2023 passed by the Commissioner (Appeals-II) in Appeal No.277/2022 whereby the penalty, amounting to Rs.100,000/- imposed in terms of S.No.1 of the Table under section 43 of the Act, 20111 by the Assistant Commissioner (Unit-25) vide Order-in-Original No.1552/2022 (hereinafter referred to as "the Original Order") dated 18.06.2022, has been confirmed.

2. Appellant's representative submits that impugned orders are bad in law and on facts. He argued that appellant is not rendering any professional training rather they are offering recreational and hobby-based training to its members. Learned counsel argued that completion certificate holder of subject course does not entitle its recipient to fly an Aircraft until he gets lisence from Civil Aviation Authority. Appellant's Licence counsel prayed for setting-aside the impugned orders.

3. Assistant Commissioner (Unit-25) vehemently opposed the arguments advanced by the appellant's counsel. She argues that appellant in engaged in providing skill-based / professional training. She contended that appellant prepares its participants to get licence from the Civil Aviation Authority and the licence holder may pursue his professional career in the subject field. The Assistant Commissioner (Unit-25) prayed for dismissal of instant appeal.

4. Departmental representative supported the impugned orders and prayed for dismissal of Instant appeal.

5. After hearing arguments of both sides, following are the points for determination before this Tribunal;

1. Whether appellant's economic activity falls within the definition of taxable service, requiring its registration under the Act, 2011?

2. Whether imposition of penalty imposed in terms of Serial No. 1 of the Table under section 43 of the Act, 2011 is justified?

3. What should the judgment be? POINT NO.1:

6. Per appellant's representative, appellant is not providing "training services" as defined under section 2(98AA) of the Act, 2011. He emphasized that activity carried out by the appellant is recreational and hobby-based training to its members. He argued that completion certificate does not entitle its recipient to fly an Aircraft until he gets licence from Civil Aviation Authority. On the contrary the Assistant Commissioner (Unit-25) argued that appellant is engaged in providing skill-based/ professional training. She contended that the training provided by the appellant is professional, as it prepares participants to obtain a license from the Civil Aviation Authority, enabling them to pursue a career in the field, thus meeting the definition under section 2(98AA) of the Act, 2011.

7. There is no denial to the fact that education and skills training are vital for personal and professional growth, but they serve distinct purposes. Education emphasizes theoretical knowledge, critical thinking, and problem-solving skills, providing a deep understanding of concepts and methodologies within a specific field. Conversely, skill-based training focuses on practical application, equipping individuals with specific skills and competencies needed for a particular job or task through hands-on experience, practical exercises, and real-world application.

8. Record reveals that the Commissioner (Appeals) got the appellant' premises surveyed through Survey and Development Wing (S&D) which found that the appellant was providing on-ground and flying courses to its members. The most basic flight training course is the Trial Flying Session, and its cost varies depending on the aircraft used, ranging from 26,000 to 31,000, whereas the Integrated Commercial Pilot License Course offered by the appellant is a comprehensive training program designed to equip aspiring pilots with the necessary skills and certifications. This course enables participants to achieve (1) Private Pilot License (PPL) i.e. the Foundational license that allows individuals to Fly privately, (2) Commercial Pilot License (CPL). This license permits pilots to be compensated for their flying services, and (3) Instrument Rating (IR) which allows pilots to fly under instrument flight rules, enhancing their flying capabilities in various weather conditions.

9. A Private Pilot's License (PPL) can be achieved within a time span of 8 months, during which the participants must complete a minimum of 40 hours of flying. Once a Private Pilot's License (PPL) is secured, the participants move to the next step towards becoming a professional pilot by acquiring a Commercial Pilot's License (CPL), which takes approximately 10 months after completing 110 hours of flight. After obtaining Commercial Pilot's License the participants may move on to obtaining an Instrument Rating. This rating allows the participants fly aircraft under Instrument Meteorological Conditions (IMC) and they can fly in challenging conditions. Appellant's entire economic activity is skill-based training coupled with practical application, equipping individuals with specific skills and competencies needed for a particular job or task through hands-on experience, practical exercises, and to real-world application, which prepares the participant to obtain a professional license from the Civil Aviation Authority, who may pursue their career in such specified field, therefore, same cannot be termed as mere educational training.

10. In view of the above discussion, I am of the considered view that appellant's economic activity falls within the definition of taxable service, requiring its registration under the Act, 2011, hence, this point is answered in affirmative. POINT NO. 2:

11. The appellant has sought waiver of penalty imposed in terms of Serial No.1 of the Table under section 43 of the Act, 2011, Instant matter pertains to non-registration before providing taxable services, penalties whereof are provided in terms of serial No.1 of the Table under section 43 of the Act, 2011. Before proceeding further, I feel it is necessary to reproduce below the relevant provisions of the Act, 2011;

43. Offences and penalties.--Whoever commits any of the offence described in column (1) of the Table below shall, in addition to and not in derogation of any punishment to which he may be liable under any other law be liable to the penalty mentioned against that offence in column (2) thereof. The sections referred to in column (3) are meant for illustrative purposes only and the corresponding offence described in column (1) may fall and be prosecuted under other sections of this Act as well. Offence Penalties Section of the Act to which offence has reference (1) (2) (3)

1. Any person. who is required to apply for registration under this Act fails to make an application for registration before providing taxable services. Such person shall be liable to pay a penalty of 10,000 rupees or five per cent of the amount of sales tax he would have been liable to pay had he been registered whichever is higher. In case of non-compliance of a notice or an order of compulsory registration, the minimum penalty shall be 100,000 rupees. Provided ...... 24 and 24B

12. Bare reading of above provision shows that penalty in terms of serial No.1 of the Table under section 43 deals with two situations i.e. "not-getting registered voluntarily" and "being registered compulsorily" provided under sections 24 and 24B, respectively. It is very much clear from the wordings of statute that penalties provided in the first part (in column (2) above) are applicable to single situation i.e. "not-getting registered voluntarily" and the assessing officer has discretion to impose a penalty either of Rs. 10,000/- or five per cent of the amount of sales tax. However, the penalty provided in second part applicable to twin situations i.e. "non-compliance of notice (requiring the taxpayer to get registered voluntarily)" or "when an order has been passed making the taxpayer registered compulsorily", wherein the law prescribes minimum penalty of Rs.100,000/-. In such circumstances it would be appropriate that the appellant must be registered under section 24 of the Act, 2011.

13. Situations mentioned at serial No.1 (in column (2) above) are interconnected. In case a person, liable to be registered, does not get himself registered, the assessing officer issues a notice requiring such a person to get himself registered voluntarily. In case such person responds to such notice positively and gets himself registered, the assessing officer, after registering the existence of mens rea behind after non-registration prior to providing taxable services, may impose either of the penalties i.e. Rs.10,000/- or five per cent of the amount of sales tax. However, in case of non-compliance of the notice (asking the person to get registered voluntarily), the assessing officer is liable to register said person compulsorily so also impose a penalty of Rs.100,000/-. Word "shall" used with the penalty (in column (2) above) makes it directory in nature, therefore; no discretion can be exercised by the assessing officer in case the taxpayer does not comply with the notice.

14. It is the matter of record that vide show-cause notice dated 18.04.2022 the assessing officer required the appellant to get himself registered, which was not responded positively. Having no other alternative the assessing officer registered the appellant compulsorily.

15. In such circumstances I am of the considered view that imposition of penalty amounting to Rs.100,000/- in terms of serial No.1 of the Table under section 43 of the Act, 2011 is justified, hence; this point is answered in affirmative. POINT No.4:

16. In view of the above discussion, instant appeal is hereby dismissed. Resultantly, findings of Commissioner (Appeals-II) stand maintained. Let the copy of this order be provided to the learned representatives of the parties. MQ/51/TAX(Trib) Appeal dismissed. 1 The Sindh Sales Tax on Services Act, 2011.