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1996 Supreme(Mad) 912
High Court of Judicature at Madras
The Honourable Mr. Justice Jayarama Chouta
PSG & Sons Charities, Rep. by its Chief Executive, Avanashi Road, Peelamedu, Coimbatore
Versus
City Municipal Corporation, Rep. by its Commissioner, Coimbatore
Writ Petition Nos.13190 of 1992 to 13194 of 1992
Decided On : 04-09-1996
Mr. R. Muthukumarasamy, Advocate for Petitioner. Mr. P.M. Baskaran, Advocate for Respondent
Educational institutions and charitable hospitals are entitled to exemption from property tax under the Coimbatore City Municipal Corporation Act, 1981.
Headnote:
PROPERTY TAX - EXEMPTION - EDUCATIONAL INSTITUTIONS AND CHARITABLE HOSPITALS - COIMBATORE CITY MUNICIPAL CORPORATION ACT, 1981 - SECTIONS 123, 167, AND 168 - INTERPRETATION AND APPLICATION.
Fact of the Case:
The petitioner, P.S.G. & Sons Charities, challenged the property tax assessments levied by the Coimbatore City Municipal Corporation on its properties used for educational purposes and charitable hospitals. The petitioner claimed exemption from property tax under Sections 123 and 167 of the Coimbatore City Municipal Corporation Act, 1981.
Finding of the Court:
The court held that the petitioner's hospital was entitled to exemption from property tax under Section 123(e) of the Act, as the payments made by patients to the hospital could not be equated to rent. The court also held that the Commissioner had the power to demand the tax for a period of three years under Section 168 of the Act, but the tax claimed before the second half of 1989-90 was barred by time. The court further held that the petitioner could make a representation to the Corporation and the Government for exemption under Section 167 of the Act.
Issues: 1. Whether the petitioner's hospital was entitled to exemption from property tax under Section 123(e) of the Coimbatore City Municipal Corporation Act, 1981? 2. Whether the Commissioner had the power to demand the tax for a period of three years under Section 168 of the Act? 3. Whether the petitioner could make a representation to the Corporation and the Government for exemption under Section 167 of the Act?
Ratio Decidendi: 1. The court held that the petitioner's hospital was entitled to exemption from property tax under Section 123(e) of the Act, as the payments made by patients to the hospital could not be equated to rent. The court relied on its earlier decision in S.N.R. Sons Charitable Trust, Coimbatore v. The Commissioner, Coimbatore City Municipal Corporation, Coimbatore, 1993 W.L.R. 769, where it was held that the payments made by patients to a hospital cannot be regarded as rent paid in the narrower sense intended under the provisions of the Act. 2. The court held that the Commissioner had the power to demand the tax for a period of three years under Section 168 of the Act, but the tax claimed before the second half of 1989-90 was barred by time. The court noted that the notices and demand issued by the Commissioner showed that he had taken action under Section 168 of the Act on the basis of escaped assessment, and there was no reference to Sections 128 and 129 of the Act. 3. The court held that the petitioner could make a representation to the Corporation and the Government for exemption under Section 167 of the Act. The court noted that Section 167 empowers the Council, with the sanction of the Government, to exempt any person or class of persons wholly or in part from the payment of any tax.
Final Decision: The court allowed WP No. 13190 of 1992 and quashed the assessment in 9029 dated 24. 1992 issued by the respondent. The court set aside the tax claimed by the respondent for the period earlier to the second half of 1989-90 in the other writ petitions viz., W.P. Nos. 13191 to 13194 of 1992. Liberty was given to the petitioner to move the respondent/Corporation and the Government to claim exemption under Section 167 of the Act.
1. In all these writ petitions, the petitioner is one and the same i.e. P.S.G. & Sons Charities, represented by its Chief Executive, Coimbatore and the respondent is the City Municipal Corporation, represented by its Commissioner, Coimbatore. Since common facts are involved and the parties are one and the same in all these writ petitions, by consent of counsel on both sides, I am disposing of all these writ petitions by this common order.
2. The prayers in these writ petitions are to issue a writ of Certiorarified mandamus or any other appropriate writ calling for the records of the respondent made in assessment in 9029, 9815, 9031, 9814 and 9030 dated 24-4-1992 respectively and quash the same and consequently, forbear the respondents from levying or demanding property tax in respect of the properties belonging to the petitioner. Trust used for the PSG Institute of Medical Sciences and Research and PSC Hospitals.
3. W.P. No. 13190 of 1992 relates to assessment in 9029 dated 24-4-1992 pertaining to hospital buildings, W.P. No. 13191 of 1992 relates to Assessment No. 9815 dated 24. 1992 pertaining to vacant land, whereas W.P. No. 13192 of 1992 is in respect of Assessment No. 9031 dated 24. 1992 in respect of hospital building. W.P. No. 13193 of 1992 is in respect of Assessment No. 9814 dated 24. 1992 in respect of another vacant land and W.P. No. 13194 of 1992 pertains to Assessment No. 9815 dated 24. 1992 in respect of College building.
4. The necessary facts for the disposal of these writ petitions can be gathered from the affidavit filed by the petitioner in all these writ petitions.
5. One C.R. Swaminathan, Chief Executive of the petitioner Trust has filed affidavits in support of the above writ petitions. In the said affidavit, he has stated that the petitioner is a Trust administered under the Scheme of Administration framed in O.S. No. 135 of 1945. It had established several educational institutions since 1926. The institutions so established by the petitioner Trust include Schools, Colleges, including that of PSG Institute of Medical Sciences and Research and PSG Hospitals. They have been established for the purpose of providing training facilities for the students of Medicine who are to undergo courses in the said Medical College. The PSG Hospitals is part of the said educational institution which is being run purely on charitable basis wherein a large percentage of beds in the said hospitals was to be served free of cost. The said institution were established with the divine objects of providing educational facilities to the students and to provide high quality medical care on charitable basis to the public.
.6. Coimbatore was a Municipality governed by the Tamil Nadu District Municipalities Act till it become a City Municipal Corporation in the year 1981. As per the provisions of the Tamil Nadu District Municipalities Act, the properties lying with the Municipal Limits of Coimbatore was liable to pay property tax under Section 81 of the said Act. However, Section 83 of the District Municipalities Act exempted certain classes of buildings and lands from the levy of Property Tax. This includes buildings used for educational purposes and charitable hospitals and dispensaries. Since Coimbatore became a City Municipal Corporation in the year 1981, it was governed by the provisions of the Tamil Nadu Act 25 of 1981 as per which buildings and lands situated within the City are liable to tax in terms of Section 121 of the said Act. Unless it was exempted under the provisions of the aforesaid Act. Section 123 of the Tamil Nadu Act 25 of 1981 provided for statutory exemptions in relation to certain classes of buildings. Though buildings used for charitable hospitals and dispensaries are exempted from the levy of property tax, buildings used for educational institutions have not been exempted in terms of the said Act.
7. The respondent Corporation had not levied any tax with reference to the buildings belong
