The principal use of a building for charitable purposes qualifies for exemption under Section 3(1)(b) of the Kerala Building Tax Act, 1975, even if some charges are levied on patients who can afford to pay. An inquiry into the principal use of the building and relevant materials is necessary to determine eligibility for exemption.

Antony Dominic, J.

This writ appeal arises from the judgment of the learned Single Judge dismissing W.P. (C).No.34824/2005. The writ petition was filed by the appellant, seeking to quash Exts.P3, P5 and P7 orders and for directing the respondents to exempt from building tax a building constructed by them, having a plinth area of 4336.14 square meters, as provided under Section 3(1)(b) of the Kerala Building Tax Act, 1975. (here-in-after referred to as the Act).

2. Facts of the case are that the appellant is a Society registered under the Societies Registration Act, 1860 and Ext.P1 is its Memorandum of Association. In pursuance to the objects set out in its Memorandum of Association, the appellant has established a hospital and for the purpose of the hospital, it has constructed the building in question. The 2nd respondent issued notice under the Act, proposing to levy building tax which was contested by the appellant on the ground that the building is used principally for charitable purposes and therefore is entitled to be exempted from building tax as provided under Section 3(1) (b) of the Act. However, the 2nd respondent rejected the claim of the appellant and issued Ext.P3 assessment order imposing building tax of Rs.3,76,200/-.

3. The assessment order was challenged before this court in O.P.No.31807/2002. By Ext.P4 judgment, this court disposed of the original petition directing that the claim of the appellant shall be referred to the Government as provided under Section 3(2) of the Act. Accordingly, the matter was referred and by Ext.P5 order dated 4.8.2004, the Government rejected the appellant’s request. By Ext.P6 representation the appellant sought reconsideration of its request for exemption. Accordingly, the appellant was heard and the Government passed Ext.P7 order dated 21.10.2005 again rejecting the claim of the appellant.

4. Paragraph 3 and 4 of Ext.P7 order being relevant, reads as under.

“Government have re-examined the case in detail with reference to the supporting documents and court decisions, and come to the conclusion, that institutions which charge fees and at the same time spend some amounts for free treatment cannot be considered as charitable institutions for the purpose of claiming building tax exemption. Exemption will be available under Section 3(1) of the Building Tax Act only if the building as such is principally used for charitable purposes.

In the above circumstances the request of the Administrator, Sacred Heart Hospital, Manimooly, Vazhikkadavu, Nilambur Taluk, Malappuram District, to exempt their building having plinth area of 4336.14 square meters from the payment of building tax cannot be considered favourably. The same is rejected.”

It is challenging the aforesaid proceedings the writ petition was filed.

5. Following the judgments in Medical Trust Hospital v. State of Kerala (2004 (2) KLT 139), which was conformed by a Division Bench of this Court in its judgment in ILR 2004 (2) Kerala 408, the writ petition was dismissed by judgment dated 31st October, 2008. It is aggrieved by the judgment of the learned single Judge the appellant has preferred this appeal.

6. We have heard the counsel for the appellant and the learned Government Pleader and considered their submissions.

7. Section 3 of the Kerala Building Tax Act, 1975, reads as under:

“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; and

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

Explanation. – For the purposes of this sub-section, ‘charitable purpose’ includes relief of the poor and free medical relief.

(2) If any question arises as to whether a building falls under sub-s.(1) or under S.3A it shall be referred to the Government, and the Government shall decide the question after giving the interested parties an opportunity to present their