Podikunju Musaliyar Memorial Charitable & Educational Trust v. State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE** **TUESDAY, THE 14TH DAY OF JUNE 2016/24TH JYAISHTA, 1938** ## **WP(C).No. 10964 of 2013 (U)** ## **-------------------------------------------** **PETITIONER(S) :** **--------------------------** **PODIKUNJU MUSALIYAR MEMORIAL CHARITABLE & EDUCATIONAL TRUST, AZEEZIA INSTITUTE OF MEDICAL SCIENCES & RESEARCH, CHANDANATHOPE, KOLLAM- 691 014, REPRESENTED BY CHAIRMAN AND AUTHORISED SIGNATORY MR. ABDUL AZEEZ, AGED 52 YEARS.** **BY ADVS. SRI.P.SANJAY SMT.A.PARVATHI MENON** **RESPONDENT(S) :** **-----------------------------** **1. STATE OF KERALA, REPRESENTED BY SECRETARY, DEPARTMENT OF REVENUE SECRETARIAT, THIRUVANANTHAPURAM, REPRESENTED BY ITS SECRETARY, PIN- 695 001.** **2. THE THAHSILDAR, KOLLAM, PIN- 691 001.** **3. THE VILLAGE OFFICER, PALLIMON, KOLLAM, PIN 691 001.** **BY GOVERNMENT PLEADER SRI. R.RENJITH** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 26-05-2016, THE COURT ON 14-06-2016 DELIVERED THE FOLLOWING:** Msd. ## **WP(C).No. 10964 of 2013 (U)** ## **------------------------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS :** **EXHIBIT P1: TRUE COPY OF THE TRUST DEED DATED 02-08-2001.** - **EXHIBIT P2: TRUE COPY OF THE DECISION OF THE 1ST RESPONDENT DATED 01-03-2013 NO. 1092/13/REV.** - **EXHIBIT P3: TRUE COPY OF THE NOTE OF ARGUMENT SUBMITTED BEFORE THE 1ST RESPONDENT DATED 12-10-2011.** - **EXHIBIT P4: TRUE COPY OF THE BOOKLET CONTAINING MINIMUM STANDARD REQUIREMENTS ISSUED BY GOVT. OF INDIA FOR ESTABLISHING MEDICAL COLLEGE.** - **EXHIBIT P5: TRUE COPY OF THE REPORT OF MCI NO. MCI 34(41) 2008-MED DATED 14-06-2008.** - **EXHIBIT P6: TRUE COPY OF THE REPORT MCI NO. 34(41) 2008-MED DATED 13-03-2009.** - **EXHIBIT P7: TRUE COPY OF LETTER MCI- N34(41) 2009-MED DATED 06-02-2010 RECORDED THOSE RESIDENTIAL QUARTERS.** ## **RESPONDENT(S)' EXHIBITS :** ## **NIL** ## **//TRUE COPY//** **P.A.TO JUDGE.** Msd. ## **A.M.SHAFFIQUE, J * * * * * * * * * * * *** W.P.C.No.10964 of 2013 ---------------------------------------Dated this the 14[th] day of June 2016 ## **J U D G M E N T** Petitioner is a charitable trust which has established a Medical College, Dental College and a Nursing College. In respect of the buildings constructed by the petitioner, they sought for exemption claiming to be a charitable institution as well as an educational institution, from payment of building tax under the Building Tax Act 1975. Claim for exemption was referred to the Government, but the Government rejected the same as per Ext.P2 order dated 01/03/2013. Petitioner challenges Ext.P2 inter alia contending that the Government ought to have exempted the Hospital, Doctors' quarters, Canteen and other structures. 2. Counter affidavit has been filed by the second respondent inter alia stating that measurements were taken in the presence of representative of the hospital. The plinth area of the entire buildings will come to 43970.56 M². The Government exempted an area of 14861.15 M² be used for educational purpose and the assessable area was computed at 29109.41 M². The hospitals were not exempted as the State has already filed W.P.C.No.10964/2013 2 SLP No.8729/11 and 8671/11. It is observed that extension in respect of such structures will depend upon the judgment of the Apex Court. 3. The learned counsel for the petitioner placed reliance upon judgement of the Full Bench of this court in **Unity Hospital v. State of Kerala** [2011 (1) KLT 236] and contended that when hostels are exempted from assessment, the same principle has to be applied in respect of hospital and other facilities. 4. Having heard the learned counsel for petitioner and the learned Government Pleader, I don't think that this issue requires a detailed consideration as the matter is already covered by the Full Bench judgment of this court in, **Alphonsa Hospital** **v. State of Kerala** _[2015 (1) KLT 815 (F.B.)]_ wherein it is held as under: _5. In S.H. Medical Centre Hospital (supra), the Hon'ble Supreme Court noted the statutory provision in S.3 relating to the manner in which 'charitable purpose' is defined and formulated two questions to decide the issue. They read as follows:_ _“i. whether the application of income derived from a building for charitable purpose is_ W.P.C.No.10964/2013 3 _sufficient to hold that a building is used 'principally' for 'charitable purpose' as per Section 3(1)(b) of the Act in order to hold it exempt from paying building tax?_ _ii. whether the Kerala High Court has correctly interpreted the 'Explanation' clause to Section 3(1) in the cases referred (supra) to hold that charitable purpose means solely 'relief of the poor and free medical relief?”_ _6. Dilating on the aforesaid two questions, the Apex Court concluded that the High Court was correct in holding that the application of income derived from a building for charitable purposes does not amount to the building being 'principally used' for charitable purpose. To examine the meaning of 'charitable purpose', the meaning given to the word 'charitable' in Oxford English Dictionary was noticed as “of or relating to the assistance of those in need”. But, it was held that such an interpretation cannot be accepted for the purposes of tax. It was also stated that if medical services were being offered free to a majority of the patients rather than a minority of patients, then the conclusion could have been reached that the buildings are principally used for charitable purposes. Resultantly, it was held that the High Court has correctly interpreted the 'Explanation1_ W.P.C.No.10964/2013 4 _clause to Section 3(1) of the Act to hold that 'charitable purpose' means 'relief of the poor and free medical relief, it was conclusively held by the Apex Court that only the building utilized for providing free medical aid can be said to be used principally for charitable purpose and it will go against the letter of the law to grant building tax exemption for all the buildings of the hospital irrespective of what it is used for simply on the ground that the overall object of the hospital is charity although it is being predominantly run on a chargeable basis._ _7. In the light of the aforesaid precedent, namely, the judgment of the Hon'ble Supreme Court dated 16.1.2014 in Civil Appeal No.665 of 2014, reported as S.H.Medical Centre hospital v. State of Kerala (2014 (1) klt 316 (SC)), the issues covered by the reference to the Full Bench stand answered by the law laid by the Hon'ble Supreme Court of India in the said precedent. The reference is answered accordingly."_ _5. Earlier a similar view was taken by a Division Bench also after considering_ _**Unity Hospital** (supra) in_ _**St. Sebastins Visitation Hospital v. State of Kerala** (_ _**2011 (4) KLT 104) and it is held as under:**_ _"3. Counsel for the appellant submitted that the appellant is a charitable institution and so much so,_ W.P.C.No.10964/2013 5 _the hospital building is entitled to building tax exemption. However, what we notice is that building tax exemption under S.3(1)(b) is geared to nature of use of the building and not to the objectives of the organization owning the building. In other words, if the building is used for charitable purposes, then it is entitled to building tax exemption, no matter the owner of the building is not engaged in any other charitable activity other than allowing the use of the building for charitable purpose. So much so, even a business concern is entitled to building tax exemption for any building used for charitable purpose. “Charitable purpose” is given an inclusive definition under the Explanation. However, what is made clear is that medical relief is understood as charity by the Legislature only when it is rendered free. In other words, a charitable institution rendering medical relief on chargeable basis is not entitled to exemption from building tax for the hospital building where medical relief is not rendered free of cost. Even though counsel for the appellant contended that the Full Bench has not considered exemption for hospital building and the findings should be treated only as obiter, we are unable to accept this contention because when the Section was dissected and interpreted, the Full Bench explained the nature and scope of exemption provided under the Act for hospital buildings. So much so, the findings of the Full_ W.P.C.No.10964/2013 6 _Bench are not obiter but should be taken as laying down the law on the subject which binds the Division Bench. We, therefore, reject this contention. We, therefore, do not find any merit in the Writ Appeal and accordingly the same is dismissed."_ 6. Hence I don't think that the petitioner's hospital building and other structures can be exempted from payment of building tax. Hence I do not find any error in the order passed by the Government. Writ petition is dismissed. (sd/-) ## **(A.M.SHAFFIQUE, JUDGE)** jsr