Bombay High Court
Kalpavruksha Charitable Trust vs The Union Of India And Ors on 13 December, 2016
Bench: S.C. Dharmadhikari
suresh 6-WPG-5728.1997.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.5728 OF 1997
WITH
CIVIL APPLICATION NO.6180 OF 1998
IN
WRIT PETITION NO.5728 OF 1997
Kalpavruksha Charitable Trust,
Jaysingpur, Dist: Kolhapur,
through its Managing Trustee
Shri Shantinath Jangonda Patil,
resident of Jaysingpur,
District: Kolhapur. .... Petitioner
- Versus -
1) The Union of India
through the Secretary,
Ministry of Finance,
Department of Revenue,
New Delhi.
2) The Deputy Director General of
Health Services, (M.C. Section),
Government of India, Ministry
of Health & Family Welfare,
Nirman Bhavan, New Delhi-11.
3) The Secretary,
Public Health Department,
Government of Maharashtra,
Mantralaya, Mumbai-400 032.
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suresh 6-WPG-5728.1997.doc
4) The Assistant Commissioner of
Customs, Group VB, Appraising
Group B, New Customs House,
Ballard Estate, Mumbai-400 038.
5) The Assistant Commissioner of
Central Excise and Customs
(Preventive), Sangli Division,
Nagar Road, Sangli-416 416.
6) The State of Maharashtra,
through the Secretary,
Public Health Department,
Mantralaya, Mumbai. .... Respondents
Mr. T.S. Ingale for the Petitioner/Applicant.
Mr. R.V. Desai, Senior Counsel with Mr. Rajinder Kumar
for Respondent Nos.1 & 2.
Ms Aparna Vhatkar, Asstt. Government Pleader, for
Respondent Nos.3 & 6.
Mr. Ashutosh Mishra i/by Mr. Jitendra B. Mishra for
Respondent No.5.
CORAM: S.C. DHARMADHIKARI &
B.P. COLABAWALLA, JJ.
DATE : DECEMBER 13, 2016
ORAL JUDGMENT (Per Shri S.C. DHARMADHIKARI, J.):
1. By this petition under Article 226 of the Constitution
of India, the petitioner challenges a decision dated 23-9-1997 of
respondent No.2 and a demand notice issued by respondent
suresh 6-WPG-5728.1997.doc
No.4 on 28-10-1997.
2. The contention raised before us by Mr. Ingale,
appearing for the petitioner, is that the impugned decision is
ex facie illegal inasmuch as the Customs Notification No.64/88,
dated 1-3-1988, issued under Section 25(1) of the Customs Act,
1962 was fully complied with. The second respondent failed to
consider that the petitioner is a Trust. It is a charitable Trust
running a medical diagnostic centre. There is no question of
indoor patient treatment facility in the diagnostic centre. The
outdoor patients referred for free treatment to the petitioner-
Trust at its centre by the Civil Hospital or any other hospital in
the locality were indeed provided treatment free of charge. As
per the prescribed norms, some patients have been charged
nominally. The Charity Commissioner of the State was satisfied
that the petitioner is indeed rendering a public service. The
diagnostic centre is administered purely on charitable grounds.
It is running in losses.
3. In any event, it is submitted that the terms and
suresh 6-WPG-5728.1997.doc
conditions of the Notification having been complied with, the
State Medical Health Authorities satisfying themselves that the
petitioner is utilising imported equipments for the diagnostic
centre, then, the demand cannot be sustained.
4. On the other hand, the contesting respondents,
relying on the statements made in the affidavit in reply, would
submit that this is a clear case of violation of the terms and
conditions on which the exemption can be granted or claimed.
Once it is a conditional exemption, then, there is no escape from
the demand. The writ petition should be dismissed.
5. For appreciating these contentions, we must refer to
some basic facts.
6. The petitioner claims to be a Public Charitable Trust
and registered under the Bombay Public Trust Act, 1950. It runs
a charitable hospital according to it, but styled as Kalpavruksha
Diagnostic and Research Centre at Miraj, District Sangli. The
first respondent is the Union of India whereas the second
suresh 6-WPG-5728.1997.doc
respondent is the Director General of Health Services,
Government of India. The third respondent is the Secretary,
Public Health Department of the Government of Maharashtra.
The respondent Nos.4 and 6 are the Officers exercising powers
under the Customs Act, 1962 and the Central Excise Act, 1944.
7. After setting out the aims and objectives of the Trust
and the relevant terms and conditions of the exemption
Notification, it is stated that the petitioner imported certain
medical equipments. The petitioner applied to the Government
of India for permission to import these items free of customs
duty by availing of this exemption Notification. The second
respondent duly verified the application and scrutinised the
documents submitted by the petitioner. It permitted the Trust to
import these medical equipments for its diagnostic centre by
availing of the exemption Notification.
8. On importing, a machinery was duly installed. After
some time, the petitioner was in need of some spare parts, some
of which were not manufactured in India. Since exemption was
suresh 6-WPG-5728.1997.doc
granted while importing the machine, the petitioner-Trust, on
2-2-1990, decided to import the spares, namely, X-Ray Tube
from Japan and applied for grant of Customs Duty Exemption
Certificate from the second respondent. The second respondent
had insisted at the time of import for execution of a Bond
favouring the President of India. The Bond was executed for the
amount mentioned in the same on 4-8-1993. Annexure-D is a
copy of this Bond/Undertaking. When the petitioner imported
the X-Ray Tube (spare), it furnished a Bank Guarantee favouring
the Department.
9. The petitioner states that all the terms and
conditions of the exemption Notification were satisfied. In that
regard, Mr. Ingale, appearing on behalf of the petitioner,
emphasised that once the equipment is covered by the
exemption Notification inasmuch as it is a hospital equipment,
then, relying on the explanation to this Notification, which is
inclusive, it is apparent that an institution rendering diagnostic
treatment is covered by this Notification. Therefore, there was
no warrant in demanding any customs duty. The requisite
suresh 6-WPG-5728.1997.doc
information was throughout provided. Nothing was held back
and rather the third respondent certified that the petitioner is
indeed rendering charitable services and has treated certain
patients free of charge at its diagnostic centre.
10. Mr. Ingale submits that earlier a writ petition was
filed because the respondents, and particularly respondent Nos.4
and 5 were seeking to enforce their orders and directions. That
is how this Court permitted the petitioner to make a
representation and directed the concerned authorities to
consider it in accordance with law. It is upon this direction being
complied with, that on 23-9-1997, firstly, the second respondent
rejected the request so as to enable the petitioner to avail of the
benefit of the exemption Notification and thereafter, based on
that the fourth respondent sought to recover the differential
customs duty on the imported X-Ray Tube and also to enforce
the Bond.
11. With the assistance of Mr. Ingale, we have perused
the writ petition and the annexures thereto. The Notification,
suresh 6-WPG-5728.1997.doc
copy of which is at pages 46-47 of the paper-book, is issued
under Section 25(1) of the Customs Act, 1962, in public interest.
It exempts all equipments, apparatus and appliances, including
spare parts and accessories thereof, but excluding consumable
items, the import of which is approved either generally or in
each case by the Government of India in the Ministry of Health
and Family Welfare, or by the Directorate General of Health
Services to the Government of India, as essential for use in any
hospital specified in the Table below para 1 of the Notification.
Then, there are terms and conditions which would envisage that
the imported equipment/hospital equipment is required because
it is not manufactured in India and that it is necessary for
running or maintenance of the hospital. The Table points out as
to how hospitals, as may be certified by the Ministry of Health
and Family Welfare, to be run or substantially aided by
charitable organisation as may be approved, from time to time,
by that Ministry would be eligible. However, the terms do not
end there for serial No.2 below the Table reads as under:-
"2. All such hospitals which may be certified by the
suresh 6-WPG-5728.1997.doc
said Ministry of Health and Family Welfare, in each
case, to be run for providing medical, surgical or
diagnostic treatment not only without any distinction
of caste, creed, race, religion or language but also,-
(a) free, on an average, to at least 40 per cent of all
their outdoor patients; and
(b) free to all indoor patients belonging to families
with an income of less than rupees five hundred per
month, and keeping for this purpose at least 10 per
cent of all the hospital beds reserved for such patients;
and
(c) at reasonable charges, either on the basis of the
income of the patients concerned or otherwise, to
patients other than those specified in Cls. (a) and
(b)."
12. It may be true as Mr. Ingale would contend that the
exemption takes within its import as a hospital even an
institution of diagnostic treatment. However, the conditions as
stipulated in the Notification and particularly inserted below the
Table have to be satisfied. At the time of import, there may have
been a certificate which enables availing of the exemption, but it
cannot be inferred from that alone that the terms and conditions
are complied with. An Undertaking has been given and in
clearest terms. It states to produce to the satisfaction of the
suresh 6-WPG-5728.1997.doc
Assistant Collector of Customs within a period of three months
or such further time, as may be granted by him, the requisite
documents. The authorities found that the hospital equipment
was indeed installed. Thereafter, the relevant deeds and other
particulars were called for. The office of the Deputy Director of
Health Services, Kolhapur Circle, issued a certificate and which
states that the institution provided diagnostic, preventive or
curative care free to 2130 patients out of total out patients
attendance in the year 1994-1995, which comes to more than
46%. Thereafter, what one finds is that the said certificate was
forwarded to the Government of India (the second respondent).
The communication to that effect is to be found at page 63 of
the paper-book. Once again there is a reminder issued. The
details were provided but having been served with the demand
and stating therein that the OPD patients treated free in the
hospital of the petitioner during 1994, 1995 and 1996 was 11%,
9% and 13% respectively, which is much below the prescribed
minimum level, and there are no indoor patients treatment
facilities in the hospital, which is also an undisputed fact, that
suresh 6-WPG-5728.1997.doc
the petitioner approached this Court. That is how this Court
allowed them to make a representation so as to avail of the
benefit of the exemption Notification and resist the demand.
13. However, the impugned communications have been
issued and demand raised on the footing that diagnostic centres,
without indoor patient treatment facilities, are not eligible for
customs duty exemption. That is, to our mind, a valid and sound
reason. It is consistent with the wording of the Notification. One
cannot only take advantage of the fact that an institution of
diagnostic treatment can be termed as a hospital and once
certified by the Ministry of Health and Family Welfare, they are
entitled to avail of the exemption Notification but in each case it
must not only be providing medical, surgical or diagnostic
treatment irrespective of the patients' caste, creed, race, religion
or language but must give free treatment, on an average, to at
least 40% of all their outdoor patients and free to all indoor
patients belonging to families with an income of less than
Rs.500/- per month, and keeping for this purpose 10% of the
hospital beds reserved for such patients. On the own showing of
suresh 6-WPG-5728.1997.doc
the petitioner, it does not satisfy these conditions. It does not
have any facility for treating indoor patients. There are no
admissions against that category. Even the treatment provided,
namely, the diagnostic treatment is not of the required
percentage, as certified by the Director General.
14. To our mind, from a reading of the annexures to the
writ petition it is apparent that the demand has been raised after
a factual satisfaction. That satisfaction is based on inspection,
scrutiny and verification of the records and documents provided
by the petitioner itself. Once such is the basis for the demand
and we do not find that to be vitiated by perversity or any error
of law apparent on the face of the record, then, there is no
warrant to interfere in writ jurisdiction. A conditional exemption
is available and can be availed of on tendering proof of
satisfaction of the terms and conditions thereof, else the
exemption cannot be availed of. In the instant case, all the terms
and conditions of the exemption Notification were made known
and voluntarily accepted by the petitioner. It even executed a
Bond and also submitted a Bank Guarantee and as noted by us
suresh 6-WPG-5728.1997.doc
herein-above.
15. Once being aware of the clear stipulations in the
exemption Notification, but failing to satisfy them, the petitioner
was not entitled to any exemption. The demand is rightfully
raised and deserves to be confirmed. The writ petition is
accordingly dismissed. Rule is discharged but without any order
as to costs.
16. In view of dismissal of the writ petition, Civil
Application No.6180 OF 1998 also stands dismissed.
17. The interim relief stands vacated forthwith.
(B.P. COLABAWALLA, J.) (S.C. DHARMADHIKARI, J.)
