The main legal point established in the judgment is that the meaning of 'charitable purpose' in Section 3(1)(b) of the Kerala Building Tax Act, 1975 is not confined to relief of the poor and free medical relief as indicated by the use of the expression 'includes' in the Explanation.

JUDGMENT :

DHANANJAYA Y. CHANDRACHUD, CJI.

1. The present reference to a three Judge Bench has been occasioned in a referring judgment of a two Judge bench in Lisie Medical Institutions vs. State of Kerala, (2017) 14 SCC 533. The two judge Bench has doubted the correctness of certain observations contained in an earlier decision of two Judges in S.H. Medical Centre Hospital vs. State of Kerala, (2014) 11 SCC 381.

2. We have heard Mr. R. Basant, senior counsel appearing on behalf of the appellant and Mr. V. Giri, senior counsel appearing on behalf of the respondents.

3. The issue turns on the interpretation of the provision for exemptions contained in Section 3(1) of the Kerala Building Tax Act, 1975, which is extracted below:

“3. Exemptions: (1) Nothing in this Act shall apply to:

(a) buildings owned by the Government of Kerala or the Government of India or any local authority.

(b) buildings used principally for religious charitable or educational purposes or as factories or workshops.

Explanation: For the purpose of this sub-section “Charitable purpose” includes relief of the poor and free medical relief.”

4. Clause (b) of sub-Section (1) of Section 3 of the Kerala Building Tax Act 1975 stipulates that nothing in the enactment shall apply to buildings used “principally for ... Charitable ... purposes.” The Explanation [now Explanation (1)] indicates that for the purpose of the sub-section ‘charitable purpose’ includes “relief of the poor and free medical relief.” Clearly, therefore, the Explanation indicates that the meaning of the expression ‘charitable purpose’ is not confined to relief of the poor and free medical relief as is evidenced by the use of the expression ‘includes’. When a statute uses the expression ‘includes’ it is a well settled principle of interpretation that the elucidation is not intended to be exhaustive.

5. However, while construing the provisions of Section 3(1)(b) of the Kerala Building Tax Act 1975, the two Judge Bench in SH Medical Centre Hospital (supra), has incorporated the following observations in Paragraph 17 of the Judgment:

“The High Court has correctly interpreted the “Explanation” clause to Section 3(1) of the Act to hold that “charitable purpose” means “relief of the poor and free medical relief.”

(Emphasis Supplied)

6. The observation which is extracted above suggests that the two-Judge Bench construed the Explanation to Section 3(1) to mean that a ‘charitable purpose’ is confined only to relief of the poor and free medical relief. This observation of the two-Judge Bench in S.H. Medical Centre Hospital (supra) does not accord with the plain meaning of the Explanation to Section 3(1). It was this aspect which was noted in the referring judgment by A.K. Sikri, J in the following observations:

“16......With due respect to the Bench which rendered the judgment in S.H. Medical Centre Hospital vs State of Kerala, (2014) 11 SCC 381, it appears that an error in interpreting Explanation I to Clause 1 of Section 3 of the Act has occurred in not noticing that it contains the word “includes” and not “means.” This error led to holding that “charitable purpose” meant only “relief of the poor and free medical relief.” Relief to the poor and free medical relief is only one of the facets to charitable purpose and Explanation simply clarifies that too to be a charitable purpose. However, the inclusive definition points out that relief to poor and free medical relief is not exhaustive as to what charitable purpose would mean. Thus, in order to find out the true scope of charitable purpose, one will have to look into the judgments of this Court, even if this very expression is examined in the context of the Income Tax Act.”

7. The two judge bench in SH Medical Centre Hospital (supra) conflated the use of the word ‘include’ with ‘means’. The Explanation to Section 3(1)(a) uses the expression ‘includes’. The plain intendment is that relief of the poor and free medical relief are not exhaustive of the content of charitable p