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2017 Supreme(Mad) 3025
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
R. MAHADEVAN, J.
Velammal Educational Trust, Represented by its Chairman, M.V. Muthuramalingam & Another - Petitioners
Versus
The State of Tamil Nadu, Represented by its Secretary, Municipal Administration & Water Supply Department, Chennai & Others - Respondents
W.P. (MD) Nos. 14508, 14509, 14510, 14517, 14518 of 2016 & W.M.P. (MD) Nos. 10767, 10768, 10769, 10770 & 10771 of 2016
Decided On : 22-11-2017
Advocate Appeared:
For the Petitioners: Niranjan S. Kumar, S. Ramesh
For the Respondents: J. Gunaseelan Muthiah, K. Muthuramalingam, B. Pugalendhi, N. Shanmugaselvam, R. Murali
The main legal point established in the judgment is that the benefit conferred under Section 122(e) of Madurai City Municipal Corporation Act, 1971, is not automatic, and hospitals must demonstrate their entitlement to exemption by making a representation and providing relevant materials to the assessing authority.
Headnote:
Property Tax Exemption - Charitable Hospitals - Madurai City Municipal Corporation Act, 1971, Section 122(e) - Summary of Acts and Sections: Madurai City Municipal Corporation Act, 1971, Section 120, Section 122(e) - The court analyzed the issue of property tax exemption for charitable hospitals under Section 122(e) of the Madurai City Municipal Corporation Act, 1971. It discussed the interpretation of the relevant provisions and the requirement for hospitals to demonstrate entitlement to exemption. The court highlighted the proviso to Section 122(e) and emphasized the need for hospitals to make a representation and provide relevant materials to prove their entitlement to exemption.
Fact of the Case:
The petitioners, charitable hospitals, sought exemption from paying property tax as demanded by the respondent Corporation. The hospitals claimed that they received only nominal amounts from patients to cover the heavy cost and expenditure incurred while treating the patients. The respondent Corporation disputed this claim, stating that the hospitals collected exorbitant rent and fees for services, and did not provide evidence of rendering services free of charge to those in need.
Finding of the Court:
The court held that the benefit conferred under Section 122(e) of Madurai City Municipal Corporation Act, 1971, is not automatic, and hospitals must make a representation to the respondent Corporation objecting to the demand of property tax and provide relevant materials to prove their entitlement to exemption. The court directed the respondent Corporation to pass appropriate orders after conducting proper investigation of the premises and considering the materials furnished by the hospitals.
Issues: The core issue was whether the petitioners-hospitals are eligible to be exempted from paying the property taxes as demanded by the respondent Corporation.
Ratio Decidendi: The court emphasized the need for hospitals to demonstrate their entitlement to exemption under Section 122(e) of the Madurai City Municipal Corporation Act, 1971, and highlighted the proviso to Section 122(e), which made it clear that such exemption is not automatic. The court directed the hospitals to make a representation and provide relevant materials to prove their entitlement to exemption.
Final Decision: The court disposed of the writ petitions, allowing the hospitals to make a representation to the respondent Corporation objecting to the demand of property tax and directed the respondent Corporation to pass appropriate orders after considering the materials furnished by the hospitals. The court also directed the hospitals to make a payment of 1/3rd of the arrears of the impugned demand, subject to the final order to be passed by the respondent Corporation.
1. By consent, all the writ petitions are taken up for final disposal. Since the issue involved in all these writ petitions, is similar, they are disposed of by this common order.
2. Facts-in-nutshell leading to the filing of W.P(MD)Nos.14508 to 14510 of 2016, are as follows:
2.1. According to the petitioner, Velammal Educational Trust was established for achieving various noble objectives on 22.01.1986. It was registered as Document No.85/1986 on the file of the Joint Sub Registrar No.III, Chennai.
2.2. The petitioner is the Chairman of Velammal Educational Trust, which runs Velammal Hospital and Medical College in 140 acres. According to the petitioner, 10 lakhs patients from rural areas as well as 3 lakhs patients from urban areas were given treatment for very lower price in the past three years.
2.3. In the petitioner's hospital, the patients are being treated with modern equipments as well as rare medicines are being supplied to them with discounts upto 30%. World class treatment is being given to the patients who are below the poverty line.
2.4. The petitioner further stated that Velammal Educational Trust and Velammal Hospital and Medical College have been established with a motive to help the poor and the needy students and patients in the society.
2.5. The fourth respondent has assigned the petitioner Trust the property tax assessment No.395496.
2.6. The petitioner made a representation dated 05.07.2016 to the fourth respondent mentioning about the exemption granted to the petitioner Trust and the Medical College under the law.
2.7. Though the petitioner Trust and the Medical College are exempted from levying property tax, the fourth respondent issued the impugned demand notice for payment of property tax for the Assessment No.395495 and also directed to pay a sum of Rs.29,977/- (Rupees Twenty Nine Thousand Nine Hundred and Seventy Seven only) in respect of R.S.No.80/1 [W.P(MD)No.14508 of 2016]; a sum of Rs.2,75,982/- (Rupees Two Lakhs Seventy Five Thousand Nine Hundred and Eighty Two only) in respect of R.S.No.52/3 [W.P(MD)No.14509 of 2016] and a sum of Rs.25,81,130/- (Rupees Twenty Five Lakhs Eighty One Thousand One Hundred and Thirty only) [W.P(MD)No.14510 of 2016] with effect from 01.10.2013.
2.8. Thereafter, the fourth respondent passed the impugned order dated 01.08.2016, directing the petitioner to pay the aforesaid amount towards property tax within thirty days with a default clause.
2.9. Challenging the same, W.P(MD)Nos.14508 to 14510 of 2016 have been filed.
3. Brief facts necessary for the disposal of W.P(MD)Nos.14517 and 14518 of 2016, are as follows:
3.1. According to the petitioner, S.R. Trust was found by Dr. N. Sethuraman on 09.05.1985 and it was duly registered under the Indian Trust Act.
3.2. It is claimed by the petitioner that the said Trust is a non-profit as well as public charitable organisation and in terms of the trust deed, Meenakshi Mission Hospital and Research Centre has been established.
3.3. The founder of the Trust has been awarded with Dr. B.C. Roy National Award for Medical Social Services. Many awards of appreciation by various District Collectors have been given to the Trust.
3.4. The Income Tax Department, Government of India, issued a certificate on 29.01.1987 approving S.R. Trust as a Public Charitable Trust under Section 12-AA of the Income Tax Act, 1961.
3.5. The hospital buildings were constructed in accordance with the sanctioned plan and the approval was granted by Uthangudi Panchayat and hence, the stand taken by the respondent Corporation that the buildings put up by the petitioner are unauthorised ones, is baseless.
3.6. The petitioner made a representation dated 11.05.2015 to the second respondent seeking exemption from paying property tax in respect of the hospital buildings as per Section 122(e) of Madurai City Municipal Corporation Act, 1971.
3.7. However, the claim of the petitioner was rejected by virtue of the impugned order dated 02.07.2015, however, without affording due op
