IMPORTANT POINT
All buildings of a hospital run on chargeable basis cannot be granted exemption.

Judgment :-

V. Gopala Gowda, J.

Leave granted.

2. The present appeal arises out of the judgment and order dated 13th March, 2009 passed by the High Court of Kerala at Ernakulam in W.A. No. 362 of 2007 whereby the High Court dismissed the writ appeal of the appellant holding that the appellant-hospital is not entitled to building tax exemption relying on the judgment of the Kerala High Court in Medical Trust Hospital v. State of Kerala [2004 (2) KLT 139]. The appellant had filed writ petition No.605 of 2007 before the High Court of Kerala which dismissed the same by order dated 23.01.2007 on the ground that the building of the appellant is not used principally for charitable purposes, pursuant to which the above said writ appeal was filed which was also dismissed. Hence, this appeal.

3. The facts of the case in brief are stated hereunder:

SH Medical Centre is a charitable institution registered under the Travancore Cochin Literary, Scientific and Charitable Societies Registration Act, 1955. This institution manages the appellant hospital which is managed by nuns of the Christian religious faith who have renounced their worldly existence to serve humanity to render charitable services like free treatment to patients belonging to the lower strata of the society and charges nominal amount for treatment from those who can afford such treatment.

4. The Memorandum of the SH Medical Center states that the object of the institution is purely philanthropic purposes and not profit. It states that the members of the society are not entitled to any share in the net proceeds of the society and in case the society is wound up the assets of the society shall not go to any of the members and shall go to any other charitable trust, society or institution with similar objects or to the Government.

5. The appellant started constructing buildings to house the hospital. Several buildings were constructed from 1987-1988 to 2002-2003 for the functioning of the hospital. On 16.10.1995 the respondent passed an order exempting the appellant from assessment of building tax. The said exemption was in connection with the main building of the hospital.

6. On 16.07.2003, the then Tehsildar, Kottayam called the representatives of the appellant to ascertain as to whether exemption is available to the appellant under the Kerala Building Tax Act, 1975 (hereinafter referred to as “the Act”). A person from the office of the Tehsildar, Kottayam visited the appellant hospital and stated that the appellant is liable to pay building tax.

7. Thereafter, the appellant filed a detailed representation stating that since it is a charitable institution engaged in charitable activities, the appellant has to be exempted from paying building tax.

8. On 27.02.2004, the appellant received a demand notice purportedly issued by the Assessing Authority by which the appellant was assessed to building tax under Sections 9(2) and 9(4) of the Act wherein building tax was assessed at an amount of [pic]24,77,700/- for a plinth area of 14826.63 Sq. meters to be paid by the appellant.

9. Aggrieved by the aforesaid orders dated 27.02.2004, the appellant filed Writ Petition(C)No. 9968 of 2004 before the High Court of Kerala.

By an order dated 02.04.2004, the learned single Judge of the High Court disposed of the writ petition directing the Tehsildar to reconsider the assessment in the light of the judgments of the High Court but rejected the request of the appellant to refer the issue relating to exemption to the Government under Section 3(2) of the Act. Against this rejection order the appellant filed a Writ Appeal No. 875 of 2004 before the High Court. The Division Bench of the High Court disposed of the writ appeal with a direction to the Tehsildar, Kottayam to refer the matter to the Government for deciding as to whether the building is entitled to get exemption from payment of building tax under Section 3(1) (b) of the Act.

10. By an order dated 01.11.2006, the Government of Kerala rejected the con