The central legal point established is that a hospital's charitable status, provision of free treatment, and operation on a no-profit basis are crucial in determining entitlement to exemption from building tax under the Kerala Panchayats Act.

1. The petitioner is the Secretary of the Good Shepherd Hospital Society, Vayithiri. Exts. PI to P12-assessment bills were issued to the Chief Medical Officer of the Hospital by the Vayithiri Panchayat where the hospital is situated. They relate to building tax for the years 1970-71 to 1974-75. A portion of the levy made is described in the bills as library cess. Exemption from the levy is claimed by the petitioner on the ground that the Good Shepherd Hospital is a charitable hospital coming within S.72(1)(f) of the Kerala Panchayats Act.

2. The fact that the Good Shepherd Hospital is a charitable hospital is disputed by the Vayithiri Panchayat, the second respondent. Even before issuing the disputed assessment-bills the petitioner bad made Ext. P13-representation to the Panchayat stating that the hospital was not liable to be assessed to building tax as it was a charitable institution. The reply to it. Ext. P14, was sent by the Panchayat only about a month after sending the bills. From that it is seen that the assessment was made on the basis that the petitioner collected charges from the public towards room rent, cost of medicines, fees, etc. and that therefore the hospital could not be treated as a charitable institution. Ext. P 15 is the certificate issued to the petitioner by the District Registrar under the Societies Registration Act, 21 of 1860. Ext. P15(a) is the Memorandum of Association of the Society. That shows that the Society was formed only for charitable purposes. Ext. P15(b) is the Rules and Regulations of the Society. It provides that in the event of winding up or dissolution of the Society if there was surplus after satisfying of the debts and liabilities such surplus bad to be transferred to an Association or Trust having similar objects of charitable nature. Exts. P15(c) and P15(d) are respectively the certificates issued by the District Medical Officer of Health, Kozhikode, and the Assistant Director of Health Services, Trivandrum, wherein it is stated that it is a charitable institution where free treatment is given to the poor and needy irrespective of caste or creed.

Para.4 of the Original Petition reads like this:

"4. The Good Shepherd Hospital, as aforesaid, belong to the Good Shephered Hospital Society of which, as stated above, the Ursuline Sisters of Mary Immaculate, are the members. This hospital is a charitable hospital as contemplated in S.72(1) (f) of the Kerala Panchayat Act, 1960, hereinafter referred to as the Panchayat Act. and is therefore exempt from the tax and cess leviable under S.66 of the Panchayat Act. The Ursuline Sisters of Mary Immaculate are running this hospital for the purposes of charitable services, receiving donations for putting up buildings and meeting the expenditure of running the hospital. There are twelve rooms which are rented out to rich patients who can afford to do so, but the rents so received is utilised and ploughed back for meeting the expenses in connection with giving treatment to the poor free of cost and also for running the hospital. No income or profit is derived from the hospital. More than 300 out-patients come to the hospital daily and no charges are collected from them for consultations. No rent is also collected from the patients who are staying in the general ward. Only the actual costs of medicines are realised. Amount, if any, the hospital thus receives is ploughed back for the purposes of charitable treatment. The hospital is run entirely on no profit basis' and is a charitable institution. Free medical aid is given there to poor in-patients and out patients. The amounts obtained by realisation of cost of medicines and rent from the pay ward rooms, are not sufficient for the maintenance of the institution and the deficiency is made up by donations received from benevolent public. It is also submitted that under S.14 of the Societies Registration Act. 1860, under which the Good Shephered Hospital Society has been registered, in the even