M/S Indus International School Private Limited Vs Deputy Director Dggi

M/S INDUS INTERNATIONAL SCHOOL PRIVATE LIMITED BILLAPURA CROSS, SARJAPURA ATTIBELE ROAD, SARJAPURA, BENGALURU, KARNATAKA - 562125 (REPRESENTED BY SHRI RAVI SADAGOPAN, GCFO S/O CUNNATHUR SADAGOPAN AGED ABOUT 53 YEARS)

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…PETITIONER

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(BY SRI. V. RAGHURAMAN, SENIOR COUNSEL APEPARING FOR SRI. C.R. RAGHAVENDRA AND

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SRI. BHANUMURTHY.J.S, ADVOCATES)

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AND:

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Digitally signed by CHANDANA B M Location: High Court of Karnataka

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DEPUTY DIRECTOR DGGI PUNE ZONAL UNIT, PUNE 301, PHOENIX BUILDING,

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17, BUND GARDEN ROAD,

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RESIDENCY CLUB, PUNE - 411 001.

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DEPUTY / ASSISTANT COMMISSIONER, CGST BENGALURU SOUTH COMMISSIONERATE, SOUTH DIVISION - 9, KENDRIYA SADAN,

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7^TH FLOOR, C WING, KORAMANGALA 3^RD BLOCK, BENGALURU – 560 034.

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TAX RESEARCH UNIT (TRU) ROOM NO. 146-G, NORTH BLOCK, NEW DELHI - 110 001.

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CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS NORTH BLOCK, NEW DELHI - 110 001 (REPRESENTED BY THE CHAIRMAN).

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UNION OF INDIA MINISTRY OF FINANCE, REPRESENTED BY SECRETARY, NORTH BLOCK, NEW DELHI - 110 001.

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GOOD AND SERVICES TAX COUNCIL (GST COUNCIL) THE SECRETARIATE, 5TH FLOOR, TOWER - II, JEEVAN BHARATI BUILDING, JANPATH ROAD, CANNAUGHT PLAZA, DELHI - 110 001.

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…RESPONDENTS

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(BY SRI. SHISHIRA AMARNATH, ADVOCATE)

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THIS W.P IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED SCN ALONG WITH FORM DRC01 BEARING DIN 202407DWW2000000C332/1202 FROM F. NO. DGGI/INT/INTL/203/2024-GR C-O/O ADG-DGGI-ZUPUNE DATED 31.07.2024, ISSUED BY RESPONDENT NO. 1, ENCLOSED AS ANNEXURE A, FOR THE REASONS STATED IN THE GROUNDS.

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THIS PETITION, COMING ON FOR FURTHER HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR

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ORAL ORDER

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In this petition, petitioner seeks for the following reliefs:-

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“ (A) Issue a writ of certiorari or any other writ or direction order to quash the impugned SCN along with Form DRC- 01 bearing DIN 202407DWW2000000C332/1202 from

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F.No.DGGI/INT/INTL/203/2024-C-O/o ADG-DGGI-ZU-Pune dated: 31.07.2024, issued by Respondent No.1, enclosed as Annexure A, for the reasons stated in the grounds.

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(B) Issue a writ of certiorari or any other writ or direction or order to quash Para 4(ii) of Circular No. 151/07/2021-GST dated 17/06/2021, issued by Respondent No.3 (TRU), enclosed as Annexure-B, for the reasons stated in the grounds.

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(C) Issue a writ of certiorari or any other writ or direction order to quash Para 2 of Circular 234/28/2024GSTdated:11/10/2024, issued by Respondent No. 3 (TRU), enclosed as Annexure C, for the reasons stated in the grounds.

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(D) Issue a writ of certiorari or any other writ or direction or order calling for records of the press note dated 09.09.2024 issued by Respondent No. 6 and quash the recommendation of Respondent No. 6 relating to affiliation fees more particularly Para 6(ii) of the Press note, enclosed as Annexure D, for the reasons stated in the grounds.

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(E) Issue a writ of certiorari or any other writ or direction or order to quash Notification No. 14/2017-CT dated 01.07.2017 [as corrected by Corrigendum No. GSR 533(E) dated 29.07.2019] issued by Respondent No. 4, enclosed as Annexure E, for the reasons stated in the grounds.

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(F) Issue a writ of certiorari or any other writ or direction or order to quash instructions vide CBIC letter bearing D.O.F. No. CBEC/20/43/01/2017-GST dated 05.10.2018 issued by Respondent No. 4, enclosed as Annexure F, for the reasons stated in the ground.

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G) Issue a writ of certiorari or any other writ or direction or order to quash instructions vide CBIC letter bearing F. No. CBEC-20/10/07/2019-GST dated 22.06.2020 issued by Respondent No. 4, enclosed as Annexure G, for the reasons stated in the grounds

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(H) Issue a writ of certiorari or any other writ or direction or a order to quash the impugned the Order-InOriginal bearing Order Sl.No.217/2024-25 SD9-GST-AC with Ref.No.722/24 dated: 11.12.2024 passed by Respondent No.2 for the period July 2017- December 2023, enclosed as Annexure-T, for the reasons stated in the grounds.

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(I) Issue a writ of certiorari or any other writ or direction or order to quash impugned Summary of the Order in Form GST DRC-07 bearing Reference No.: ZD2912240662387 dated 20.12.2024 issued by the Respondent No.2 enclosed as Annexure T1, for the reasons state grounds

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And

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(J) Grant such other consequential reliefs, as this Hong High Court may think fit including the cost of the petition.”

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The petitioner is a school which runs classes upto 12^th grade and caters to the International Baccalureate Diploma and related diplomas. It is contended that the students who pass the school are awarded the IB Diploma and IGCSE Board Cambridge and for this purpose, the petitioner is affiliated with the foreign

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Boards which, in turn collect affiliation fees from the petitioner. It is contended that pursuant to inspection proceedings conducted by the respondents, correspondence between them and petitioner etc., respondents addressed a communication dated 16.07.2024 informing the petitioner that it was liable to discharge/pay GST on reverse charge basis on affiliation services, fees etc., paid/provided by the petitioner who submitted a reply dated 19.07.2024 refuting the claim of the respondents and specifically stating that the affiliation fees, services etc., provided by the petitioner are exempt under Entry No.69(b)(iv) of Notification No.9/2017-IGST(R) dated 28.06.2017 issued by the respondents. It is contended that despite the said reply submitted by the petitioner, respondents issued an intimation in Form DRC-01A dated 22.07.2024 followed by the impugned Show Cause Notice dated 31.07.2024 to the petitioner under Section 74(1) of the CGST/KGST Act demanding tax liability in a sum of Rs.1,39,43,245/- for the financial year/tax period July 2017 to December 2023, aggrieved by which, the petitioner initially preferred the present petition on 20.11.2024. During the pendency of which respondents passed the impugned order-in-original dated 11.12.2024 followed by a summary dated 20.12.2024 and as such,

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petitioner got the petition amended and is before this Court seeking the aforesaid reliefs.

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Respondents have filed their statement of objections and have contested the claim of the petitioner interalia contending that the affiliation fees paid to the International Boards would attract GST under the reverse charge mechanism and that the Notifications issued by the Government only exempt educational institutions, who render services to the schools and not Universities which affiliate schools and as such, there is no merit in the petition and that the same is liable to be dismissed.

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Heard learned Senior counsel for the petitioner and learned counsel for the respondents – Revenue and perused the material on record.

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In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned Senior counsel for the petitioner submits that the issue in controversy involved in the present petition is directly, squarely and fully covered by the judgment of this Court in the case of M/s.

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Bangalore North University vs Joint Commissioner of Central

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Tax & others - 2025 (9) TMI 385 (Kar), wherein this Court held that affiliation fees paid to Universities are not exigible to GST and that the term “educational institutions” appearing in the said Notification would also cover Universities. It was submitted that since the issue pertains to affiliation fees paid to affiliation Boards abroad, the same would be covered by IGST Notification 9/2017-R dated 28.6.2017, wherein Serial Number 69 would cover the same and the said entry is identical to Notification 12/2017-R dated 28.06.2017 which was considered in the said judgment.

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5.1 It was also pointed out that insofar as Board Universities located outside India are concerned, in order to get the exemption should fall within the ambit of institutions recognised by law for the time being in force and that in this context, the Ministry of Human Resources Development vide its Notification dated 13.03.1995 recognizes foreign qualifications recognized by Association of Indian Universities (AIU) as recognised for the purpose of employment to posts and services under the Central Government and that no separate order is required to recognize each such foreign qualification. He would invite my attention to the Communication at Annexure-Q1 dated 03.09.2022 addressed by

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the AIU in order to contend that IB is a qualification recognized as plus 2 stage qualification to enable admission to Bachelor's degree programme, as a result of which, the benefits of the exemption notification would be applicable to the petitioner also and that serial (i) of definition of educational institutions would also cover petitioner also being plus 2 qualifications being equivalent to IB/IGSCE qualifications. It was therefore submitted that the impugned SCN and Order-in-Original are illegal, arbitrary and the same deserve to be quashed.

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Per contra, learned counsel for the respondents – revenue submits that there is no merit in the petition and that the same is liable to be dismissed.

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As rightly contended by the learned Senior Counsel for the petitioner, the issue in controversy involved in the present petition is directly, squarely and fully covered by the judgment of this Court in the case of Bangalore North University vs. Joint Commissioner - 2025 (9) TMI 385 (Kar), wherein this Court held that affiliation fees paid to Universities are not exigible to GST and that the term “educational institutions” appearing in the said Notification would also cover Universities. The exemption

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notification in that case was serial number entry number 66 of Notification 12/2017-CT dated 28.06.2017 which is identical/similar to the current entry which is serial number 69 of IGST Notification 9/2017-IGST dated 28.06.2017. While dealing with the said issue, this Court held as under:

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“ Re: Issue No. (v) - Whether the services provided by the Universities are exempt from GST in terms of Entry No. 66 of Notification No. 12/2017-CT (R) dated 28.06.2017 ?

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16. It is contended by the learned Senior counsel that the services, if any, provided by the Universities are covered under exemption i.e., Entry No. 66 of Notification No. 12/2017-CT (R) dated 28.06.2017. Entry No. 66 of the Notification No. 12/2017-CT (R) dated 28.06.2017 exempts services in relation to education. Entry No.66 of the said Notification reads as under:

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*Sl.* *No.*	*Chapter,* *Section,* *Heading,* *Group* *Service* *Code* *(Tariff)*	or	*Description of Services*	*Rate* *(%)*
66	Heading 9992 Heading 9963	or	Services provided: (a) by an educational institution to its students, faculty and staff;	Nil
			(aa) by an educational institution by way of conduct of entrance examination against consideration in the form of entrance fee;

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(b) to an education al institution, by way of, (i) transportation of students, faculty and staff; (ii) catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory;

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(iii) security or cleaning or housekeeping services performed in such educational institution; (iv) services relating to admission to, or conduct of examination by, such institution; (v) supply of online educational journals or periodicals: Provided that nothing contained in sub-items (i), (ii) and (iii) of item (b) shall apply to an educational institution other than an institution providing services by way of pre- school education and education up to higher secondary school or equivalent:

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Provided further that nothing contained in sub-item (v) of item (b) shall apply to an institution providing services by way of, (i) pre-school education and education up to higher secondary school or equivalent; or (ii) education as a part of an approved vocational education course.

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16.1 Paragraph 2(y) of the Notification defines the phrase ‘educational institution’ as below:

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2(y) “educational institution” means an institution providing services by way of,—

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(i) pre-school education and education up to higher secondary school or equivalent;

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(ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;

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(iii) education as a part of an approved vocational education course;

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16.2 As pointed out by the learned Senior counsel the above exemption entry is similar to the exemption entry under the erstwhile service tax law, which exempted educational services; while interpreting the above exemption entry, the High Court of Bombay in Goa University’s case supra, by referring to the decision of the Hon’ble Division Bench of this Court in the case of Principal Additional Director General, DGGSTI vs Rajiv Gandhi University of Health Sciences - (2024) 22 Centax 526 (Kar.) , observed that University would also qualify as an educational institution for the purpose of exemption. The Court held as under:

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46. We are in respectful agreement with the view of the High Court of Karnataka in Rajiv Gandhi University of Health Sciences (supra) where it is held that University which grants affiliation is also an educational institution. The Madras High Court in Madurai Kamaraj University vs Jt. Commr. of GST &C.Ex., Madurai [2021 (54) GSTL 385 (Mad.)], held that the word “educational institution”, cannot denote only the college affiliation to the University, but it includes the University. We therefore find merit in the submissions of the learned Senior Advocate that even assuming that the affiliation fees collected by the University, is to be regarded as a service, the said services provided by

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Goa University are covered under the 1st limb of the exemption entry as ultimately the student of an affiliation college has to be regarded as a student of the University which grants him the degree.

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47. It is material to note that without the affiliation from the Petitioner University, the constituent colleges are not permitted to admit students for the courses. Further, the examination is conducted by the Goa University which in turn leads to award of degree to the students. Hence the fees which are collected from colleges are clearly covered by the exemption notification. The activity of the Goa University in collecting the affiliation fees is exempt from GST and hence the fees collected by Goa University is not liable to tax.

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48. The Goa University is actively involved in imparting education to students, and it acts as a regulator of education. Section 24 of the Goa University Act specifically empowers University to pass ‘ordinance’ for the admission of students to the University and their enrolment, fee to be charged for admission and examination. It is on the basis of the affiliation that is granted by the University that the affiliation colleges conduct courses, conduct examinations and also award the degree to the students admitted to secondary education. The term ‘education’, in our opinion, and as rightly submitted by the learned Senior Advocate for the petitioner University, should not be restricted to the activity of teaching/providing instruction to students inside a classroom, rather it is a wider term which would involve the activity of designing the curriculum for the course of study

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which would be used by constituent colleges, giving affiliation to colleges so that the standard of education imparted by them is in accordance with the standards set by the Goa University, conferring the degree at the end of the course to the students.

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16.3 Based on the above, the Bombay High Court observed as below on the aspect of exemption under clause (a) of Entry No. 66:

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54. …………….. The University is also an educational institution and students of the University, include students studying through affiliated colleges. Thus, the activities of the University, in so far as it relates to levying of affiliation fees is exempt from GST.

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16.4 Further, the Bombay High Court observed that the affiliation and other services would also be covered under clause (b)(iv) of Entry No.66, which exempts the services relating to admission to, or conduct of examination. The Court held as under:

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54. ……………….. The Circular dated 11.10.2024 in its application to the Goa University where it is clarified that the affiliation services by universities to colleges are not by way of services related to the admission of students to such colleges or the conduct of examinations by such colleges, is erroneous.

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16.5 Respondents placed reliance on the judgment of the Telangana High Court in the case of Care College of Nursing’s case supra to contend that affiliation fees charged

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by the University from colleges for granting affiliations to colleges is not exempted under Sl.No.66 of Notification No. 12 of 2017, dated 28.06.2017. In my view, with due respect, the High Court of Telangana in the case of Care College of Nursing’s case supra has not addressed the issue as to whether Universities undertake a supply in the course or furtherance of business for a consideration and consequently, GST could be levied on a University. Further, the Telangana High Court failed to notice that the definition of ‘educational institution’ is contained in the Notification itself and does not restrict the same to colleges but is wide enough to cover a University and this aspect of the matter is very important to preserve the object of the Notification. It should also be noted that the High Court records a finding that the University has been paying GST and the colleges are only challenging the said levy.

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16.6 Respondents also placed reliance upon the judgment of the Apex Court in Dilip Kumar’s case supra, to contend that the exemption notification is to be interpreted strictly and where there is an ambiguity in the interpretation of exemption notification, the benefit should enure in favour of revenue. However, as rightly pointed out by the learned Senior counsel, while interpreting an exemption notification strictly, the purpose of the exemption notification itself should not be defeated [See: Mother Superior v. State of Kerala, 2007 SCC OnLine Ker 578 (Para 27); DGGSTI vs Rajiv Gandhi University of Health Sciences (2024) 22 Centax 526 (Kar) (Para IX(d)); Canterbury Ladies Hockey Club vs The Commissioners for Her Majesty’s Revenue and

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Customs in Case C-253/07 (ECJ) (Para 17, 19, 23, 25 and 29)].

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16.7 In light of the clarification issued by CBIC vide C.B.E. & C. Flyer No. 41, dated 01.01.2018, the purpose of the exemption entry is to promote education. Consequently, the exemption cannot be restricted to classroom teaching as held by the Bombay High Court in Goa University’s case supra at Paragraph 48.

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16.8 It is noticed that the very purpose of the notification is to ensure that students need not have to pay GST on the fees that they are paying. If GST levy is fastened on the Universities, they would necessarily pass on the same to the colleges (being an indirect tax), and in turn colleges will pass on the same to the students. Therefore, the very object of exemption will stand defeated. For these additional reasons and the reasoning given by the Bombay High Court, I hold that the exemption is available to the Universities.

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Issue No. (v) is accordingly answered in favour of the petitioners-Universities.”

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Learned Senior Counsel for the petitioner is also correct in his submission that the courses conducted by the petitioner are recognized by AIU which in turn is recognized by the Ministry of Human Resource Development and that consequently, in terms of the said Notification 9/2017-IGST at serial number (i) and (ii) of the definition relating to educational institutions are applicable to the

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petitioner which allows education up to 12^th standard which is recognised by AIU to cover the IB courses run/conducted by the petitioner.

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Under these circumstances, I am of the view that the present petition deserves to be partly allowed by quashing the impugned show cause notice as well as the impugned order-inoriginal and summary issued by the respondents. However, all other remaining contentions and reliefs put forth and sought for by the petitioner are kept open to be decided in an appropriate case and the same are not dealt with in the present order.

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In the result, I pass the following;

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ORDER

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(i) Petition is hereby partly allowed.

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(ii) The impugned show cause notice at Annexure-A dated

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31.07.2024, impugned Order-in-Original at Annexure-T dated 11.12.2024 as well as the impugned summary at Annexure-T1 dated 20.12.2024 are hereby quashed.

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Sd/(S.R.KRISHNA KUMAR) JUDGE

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SV/SRL

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List No.: 3 Sl No.: 2

M/S Indus International School Private Limited v. Deputy Director Dggi

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M/S Indus International School Private Limited v. Deputy Director Dggi

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