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2008 Supreme(Mad) 580
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE P.D. DINAKARAN & THE HONOURABLE MR. JUSTICE R. REGUPATHI
The Special Officer and Commissioner, Tiruchirapalli Corporation, Tiruchirapalli
Versus
Hindu Mission Hospital rep. by its Secretary
Writ Appeal No.612 of 2003
Decided on : 16-02-2008
For the Appellant:P. Srinivas, Advocate.
For the Respondent:Ravichandran, T.R. Rajaraman, Advocates.
The main legal point established is that the exemption under Section 123(e) of the Act for charitable hospitals is not automatic, and the hospital must make a representation to seek exemption from property tax.
Headnote:
Property Tax - Charitable Hospitals - Tamil Nadu District Municipalities Act, 1920, Section 86(e); Coimbatore Municipal Corporation Act, Section 123(e)
Fact of the Case:
The appeal challenges the order quashing the demand of property tax by the appellant Corporation and forbearing them from collecting any property tax from the respondent Hospital, a registered charitable institution.
Finding of the Court:
The court found that the exemption under Section 123(e) of the Act is not automatic and the respondent Hospital can make a representation to the appellant Corporation objecting to the demand of property tax, and the Corporation shall pass appropriate orders considering the materials furnished by the Hospital.
Issues: The main issue was whether the respondent Hospital was entitled to exemption from property tax as a charitable hospital.
Ratio Decidendi: The court held that the exemption under Section 123(e) of the Act is not automatic and the Hospital must make a representation to the Corporation to seek exemption, and the Corporation shall pass appropriate orders considering the materials furnished by the Hospital.
Final Decision: The order quashing the demand of property tax was set aside, and the respondent Hospital was directed to make a representation to the appellant Corporation objecting to the demand of property tax, and the Corporation shall pass appropriate orders considering the materials furnished by the Hospital.
P.D. Dinakaran, J.
The appeal is directed against the order dated 21. 2002 made in W.P.No.10472 of 1995 quashing the demand of property tax by the appellant Corporation by proceedings dated 15. 1995 and forbearing them from collecting any property tax in receipt of the Hindu Mission Hospital, A74, Anna Nagar Main Road, Thennur, Trichy.
2. 1. The case of the respondent Hospital, in brief, is that the Hindu Mission is a registered Society under the Tamil Nadu Societies Registration Act bearing registration No.49/78. Therefore, the same is a public charitable and non profitable and non commercial institution, as recognised by the Income tax Department by granting exemption under Section 80G of the Income Tax Act.
2. 2. According to the respondent Hospital, their object is to prevent, control, treat and relieve human diseases, by rendering free, subsidized and charitable service or aid to the poor, needy, distressed and disabled and also to establish research Centres for the study of the diseases of mankind. They are running and maintaining the hospital in an area of nearly 20,425 sq.ft.
3. The respondent Hospital states that they receive only nominal amount to meet the heavy cost and expenditure incurred while treating the patients. According to them, cost of the expenditure is partially received from the patient. Hence, they claim exemption under Section 86(e) of the Tamil Nadu District Municipalities Act and now under Section 123(e) of the Tiruchirappalli City Municipal Corporation Act, after the appellant Corporation become the Municipal Corporation.
2. 4. However, the appellant Corporation, by proceedings dated 15. 1995, raised a demand for Rs.17,409/- for half yearly, with effect from October 1993. Hence, the writ petition.
2. 5. The writ petition was resisted by the appellant Corporation disputing the character and status of the respondent Hospital, as the respondent Hospital, in reality, was running on profit motive. Rent was collected from the patients who were admitted, fees were also received for rendering service in the hospital and no service was rendered free of charge to whomsoever. The plea that they were collecting only a nominal charge from the poor, distressed, disabled and needy persons, based on their income was not true and no evidence was produced to that effect. Further, the exemption granted under Section 80G of the Income Tax Act, would not, by itself, entitle the respondent Hospital to seek an exemption from the payment of property tax.
6. That apart, the respondent Hospital had also rented out a portion of the premises to a third party to run canteen and collecting parking fees for the vehicles parked in the premises and therefore, they were not entitled to the exemption under Section 123(e) of the Act automatically, as contended.
7. The learned single Judge, after weighing the rival contentions and placing reliance on the decisions in S.N.R. Sons Charitable Trust, Coimbatore Vs. The Commissioner, Coimbatore City Municipal Corporation, Coimbatore [1993 (10) WLR 769] and PSG & Sons Charities v. City Municipal Corporation, Coimbatore [1997 (1) CTC 331] and relying on the exemption granted by the Income tax Department under Section 80G of the Act, allowed the writ petition. Hence, the present appeal by the Corporation.
3. The learned counsel for the appellant and the respondent reiterated the contentions made before the learned single Judge.
1. Before proceeding on the contentions of both sides, viz. on the right of the appellant Corporation to levy property tax and the corresponding duty or obligation or liability of the respondent Hospital to pay the property tax, it is apt to refer Section 86(e) of the Tamil Nadu District Municipalities Act, 1920.
Section 86: General exemption:- The following buildings and lands shall be exempt from the property tax:
.(a) ...
.(b) ...
.(c) ...
.(d) ...
.(e) Charitable Hospitals and dispensaries but not including residential quarters attached th
