Deva Matha Hospital, Koothattukulam v. State of Kerala and Others

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.SURENDRA MOHAN MONDAY, THE 10TH DAY OF SEPTEMBER 2012/19TH BHADRA 1934 WP(C).No. 12079 of 2006 (K) --------------------------- PETITIONER: ----------- DEVA MATHA HOSPITAL, KOOTHATTUKULAM, ERNAKULAM, REPRESENTED BY ITS ADMINISTRATOR, SISTER FOBIOLA. BY ADV. SRI.BECHU KURIAN THOMAS RESPONDENTS: ------------ 1. STATE OF KERALA, REPRESENTED BY SECRETARY, DEPARTMENT OF TAXES, THIRUVANANTHAPURAM. 2. KOOTHATTUKULAM PANCHAYAT, REPRESENTED BY SPECIAL GRADE EXECUTIVE OFFICER, KOOTHATTUKULAM P.O. 3. SPECIAL GRADE EXECUTIVE OFFICER, KOOTHATTUKULAM PANCHAYAT, KOOTHATTUKULAM P.O. BY ADV. SRI.P.V.SANTHOSH JOSE BY GOVERNMENT PLEADER THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 10-09-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **A P P E N D I X** WP(C).No. 12079 of 2006 (K) ## PETITIONER'S EXHIBITS EXT.P1: TRUE COPY OF THE RESOLUTION DT.22.3.1976. EXT.P1(a):TRUE COPY OF THE CERTIFICATE DT.21.3.1986 ISSUED BY TAHSILDAR, MUVATTUPUZHA. EXT.P1(b):TRUE COPY OF THE CERTIFICATE DT.27.08.92 ISSUED BY ADDITIONAL DISTRICT MAGISTRATE, ERNAKULAM. EXT.P2: TRUE COPY OF THE JUDGMENT DT.18.12.98 IN O.P.NO.9467/94. EXT.P3: TRUE COPY OF THE REVENU RECOVERY NOTICE DATED 26.2.2000 ISSUED BY THE 2ND ESPONDENT. EXT.P4: TRUE COPY OF THE JUDGMENT DATED 29.06.2004 IN O.P.NO.7397/2000. EXT.P5: TRUE COPY OF THE DECISION AS COMMUNICATED TO THE PETITIONER DT.7.4.2006 NUMBERED AS A6-64/2000 ISSUED BY THE 3RD RESPONDENT ALONG WITH ATTACHED STATEMENT. EXT.P6: TRUE COPY OF THE REVENUE RECOVERY NOTICE DT.26.04.06 ISSUED BY THE 3RD RESPONDENT. ## RESPONDENTS' EXHIBITS EXT.R1: TRUE COPY OF THE STATEMENT DT.26.02.1998 FILED BY THE PETITIONER BEFORE THE RESPONDENT PANCHAYAT. EXT.R2: TRUE COPY OF THE DECISION TAKEN BY THE RESPONDENTS ON THE APPEAL PREFERRED BY THE PETITIONER. /TRUE COPY/ P.A TO JUDGE **K.SURENDRA MOHAN, J. ----------------------------------------------------W.P(c) No.12079 of 2006-K ---------------------------------------------------Dated this the 10[th] September, 2012** ## **J U D G M E N T** The petitioner challenges the action of respondents 2 and 3 in levying property tax on the buildings owned by him. According to the petitioner, it is a charitable institution governed by the Congregation of the Sisters of Adoration of the Blessed Sacrament. Later a Charitable Trust was created to take over the management of the hospital and thus the petitioner hospital is a Charitable Trust. The hospital caters to the medical needs of the people of Koothattukulam and surrounding areas who are mainly poor. For the benefit of the people living at places away from the hospital, mobile clinics are used to provide medical aid and treatment to the underprivileged people. The hospital, according to the petitioner, is funded by voluntary contributions as well as donations from philanthropic persons. The profits generated from the conduct of the hospital are utilised for the development of the facilities therein and for its upkeep and 2 **W.P(c) No.12079 of 2006-K** maintenance, besides payment of salary to its employees. For the above reason, it is contended that the hospital is a charitable institution. 2. The Kerala Panchayat Act, 1960 (hereinafter referred to as `the Old Act' for short) contained a provision exempting such hospitals from the assessment of building tax. Section 72(f) of the Old Act specifically exempts Charitable Hospitals and Dispensaries from tax. Under the said provision, the petitioner's hospital had been granted exemption from building tax, as evident from Ext.P1. As per Ext.P1(a), the Tahsildar and as per Ext.P1(b), the Additional District Magistrate, Ernakulam, have also found that the petitioner's hospital is a charitable and non profit making institution. 3. In spite of the above, building tax was demanded from the petitioner for the years 1992-'93 and 1993-'94. The petitioner challenged the said levy before this Court in O.P.No.9467 of 1994. As per Ext.P2 judgment, the petitioner was directed to approach the Panchayat Committee, to which an appeal was provided. Accordingly, though the petitioner had preferred an appeal, the same was not favourably considered. 4. Thereafter, there were no further demands for some 3 **W.P(c) No.12079 of 2006-K** time. 5. In the above circumstances, as per Ext.P3 dated 26.02.2007, tax was demanded in respect of the petitioner's buildings for the years 1992-'93 to 1999-2000. The petitioner again approached this Court by filing O.P.7397 of 2000. As per Ext.P4 judgment, the said Writ Petition was disposed of directing the Panchayat Committee to dispose of the appeal filed by the petitioner in respect of the assessment years 1992-'93 and 1993-'94 after affording an opportunity of personal hearing to the petitioner. Recovery of tax for the said assessment years was kept in abeyance. Therefore, there was no embargo against recovery of the tax in respect of the subsequent years. In the above circumstances, as per Ext.P5 dated 07.04.2006, the Panchayat Committee decided not to grant the exemption that was sought for by the petitioner for the reason that, according to the said authority, the petitioner was not a charitable institution alone. 6. Ext.P5 was followed up with Ext.P6 and a demand notice under the Revenue Recovery Act. Thereupon, the petitioner filed this Writ Petition. This Writ Petition was admitted on 28.04.2006 and a conditional order of stay of 4 **W.P(c) No.12079 of 2006-K** recovery of the tax assessed was granted to the petitioner. Accordingly, the petitioner remitted the amount of Rs.50,000/that was stipulated as a condition. The interim order is still in force. 7. A counter affidavit has been filed on behalf of the 3[rd] respondent disputing the contentions of the petitioner. According to the counter affidavit, the petitioner's hospital is not a charitable institution and is therefore not entitled to the exemption that is sought for. Regarding the contention regarding limitation, according to the 3[rd] respondent, notices had been issued to the petitioner at the appropriate time and therefore the question of limitation does not arise. It is also pointed out that the petitioner had paid building tax for the period from 1983-'84 to 1991-'92 without raising any objections. It was only thereafter that they had requested for the grant of exemption. 8. I have heard the respective counsel appearing for the contesting parties. 9. According to the learned counsel for the petitioner, the petitioner is entitled to claim exemption under Section 72(f) of the old Act, for the years 1992-'93 and 1993-'94. With respect 5 **W.P(c) No.12079 of 2006-K** to the subsequent years, it is contended that the Panchayat had not issued any demand notices at the appropriate time and therefore, the tax demanded has become time barred under Section 243 of the Kerala Panchayat Raj Act, 1994. It is pointed out by the learned counsel that after Ext.P2 judgment dated 18.12.1998, Ext.P3 demand notice was issued only on 26.02.2000. During the interregnum period, though there was no order of stay against recovery of the tax demanded, no notices were issued. On the date of Ext.P3, tax for the years prior to 1997 had become time barred. Ext.P4 judgment refers specially to the years 1992-'93 and 1993-'94 alone. It has been specifically ordered that the claim of exemption for the subsequent years need not be considered. In respect of the above, a demand notice was issued only on 26.04.2006 as per Ext.P6. By that time, it is contended that the tax demanded for the earlier period, except the years 1992-'93 and 1993-'94, upto the year 2002-2003 have become time barred. In view of the above, it is contended that the impugned demands are liable to be set aside. The learned counsel also places reliance on the decision reported in **Good Shephered Hospital v. Executive Officer** [1973 KLT 348] to contend that the exemption claimed 6 **W.P(c) No.12079 of 2006-K** by the petitioner is only to be granted. 10. After having heard the learned counsel for the petitioner at length, what emerges is that the petitioner has no explanation as to why the remedy by way of an appeal to the Tribunal for Local Self Government Institutions that is provided by the Panchayat Raj Act, 1994 has not been exhausted. The question as to whether the petitioner is a charitable institution entitled to the benefit of Section 72(f) of the old Act is a matter that was once remanded to the Panchayat Committee as per Ext.P2 judgment. However, as per Ext.P5, the petitioner had only been informed that the Panchayat Committee had decided not to exempt the petitioner from the payment of property tax. The decision of the Panchayat Committee was never communicated to the petitioner, it is contended. The said decision has been produced along with the counter affidavit as Ext.R2. The only reason stated in Ext.R2 is that the petitioner is not a fully charitable institution. Absolutely no reasons are stated for the above finding. The Panchayat Committee while considering the appeal ought to have stated reasons for its finding. Therefore, Exts.P5 and Ext.R2 are unsustainable. In view of the fact that the claim for exemption made by the 7 ## **W.P(c) No.12079 of 2006-K** petitioner has been pending from the year 1992-'93 onwards, I do not think that the same should again be considered by any other authority at this length of time. 11. As per Section 72(f) of the Old Act, Charitable Institutions and Dispensaries are exempted. Ext.P1 shows that such exemption had been granted to the petitioner earlier. Though a counter affidavit has been filed in this case, absolutely no evidence or material has been produced to show that there has been any change in the character of the hospital so as to justify the imposition of building tax on the petitioner's institution in derogation of Ext.P1. Exts.P2 and P3 also support the petitioner's claim regarding the status of the hospital as a charitable institution. Therefore, I am inclined to allow the said claim. For the above reason, Ext.P5 is quashed. The petitioner shall be entitled to the exemption that she has sought for, under Section 72 of the Old Act in respect of the assessment years 1992-'93 and 1993-'94. 12. With respect to the subsequent years, though it is contended that the tax for the said years have become barred in view of the provisions of Section 243 of the Keala Panchayat Raj Act, 1994, the said claim is better left to be adjudicated by the 8 **W.P(c) No.12079 of 2006-K** Tribunal for Local Self Government Institutions constituted for the purpose of deciding such questions under the Act. Therefore, the petitioner is relegated to statutory remedy under the provisions of the Act. The learned counsel for the petitioner however submits that the time for filing such an appeal has already expired. However, having regard to the facts and circumstances of this case, since the petitioner has been pursuing his remedy before this Court in this Writ Petition from the year 2006, the petitioner shall be entitled to exclude the time taken by the pendency of this Writ Petition before this Court while computing the period of limitation for filing an appeal before the Tribunal. 13. In view of the above, this Writ Petition is ordered as follows: a) It is directed that the petitioner's hospital buildings be given the benefit of exemption from building tax under Section 72(f) of the Kerala Panchayat Act, 1960, for the assessment years 1992-'93 and 1993-'94; b) With respect to the objections of the petitioner to the assessment of building tax on the hospital for the subsequent years, the petitioner shall be at liberty to challenge the said 9 **W.P(c) No.12079 of 2006-K** assessments before the Tribunal for Local Self Government Institutions, Thiruvananthapuram, to which an appeal shall be filed within a period of 30 days of receipt of a copy of this judgment. If an appeal is filed within the time stipulated above, the same shall be entertained by the Tribunal, excluding the time taken for pursuing this Writ Petition before this Court and the matter shall be considered and disposed on the merits; c) The petitioner shall also be at liberty to seek necessary interim orders from the Tribunal, if so advised. The interim order granted by this Court shall continue to be in force for a period of 30 days of the date of receipt of a copy of this judgment by the petitioner. This Writ Petition is disposed of as above. ## _**(K.SURENDRA MOHAN, JUDGE)**_ rtr/