Kerala High Court
The Caritas Ayurvedic Hospital Trust, ... vs The State Of Kerala on 20 February, 2024
Author: Kauser Edappagath
Bench: A.K.Jayasankaran Nambiar, Kauser Edappagath
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR
&
THE HONOURABLE DR. JUSTICE KAUSER EDAPPAGATH
TUESDAY, THE 20TH DAY OF FEBRUARY 2024 / 1ST PHALGUNA, 1945
WA NO. 243 OF 2024
AGAINST THE JUDGMENT WP(C) 32676/2022 OF HIGH COURT OF
KERALA
APPELLANT/PETITIONER IN WP(C):
THE CARITAS AYURVEDIC HOSPITAL TRUST, THELLAKOM
AGED 45 YEARS
REPRESENTED BY ITS DIRECTOR, FR.REJI MATHEW
KOCHUPARAMBIL, AGED 45 YEARS, S/O MATHAI, THE
CARITAS AYURVEDIC HOSPITAL TRUST, THELLAKOM,
KOTTAYAM, PIN - 686630
BY ADV PRABHA JOSE
RESPONDENTS/RESPONDENTS IN WP(C):
1 THE STATE OF KERALA,
REPRESENTED BY SECRETARY, DEPARTMENT OF REVENUE,
MAHATMA GANDHI ROAD, STATUE, PALAYAM,
THIRUVANANTHAPURAM, PIN - 695001
2 THE DISTRICT COLLECTOR, KOTTAYAM
KOTTAYAM - KUMILY ROAD, COLLECTORATE, KOTTAYAM,
KERALA, PIN - 686002
3 THE REVENUE DIVISIONAL OFFICER, KOTTAYAM
MINI CIVIL STATION, KOTTAYAM, PIN - 686001
W.A.No.243/2024
-:2:-
4 THE TAHASILDAR, KOTTAYAM TALUK OFFICE
1ST FLOOR, MINI CIVIL STATION, KOTTAYAM, PIN -
686001
5 THE VILLAGE OFFICER, PEROOR VILLAGE
ETTUMANOOR PEROOR ROAD, KOTTAYAM, PIN - 686637
OTHER PRESENT:
SR.GP-V.K.SHAMSUDHEEN.
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON
20.02.2024, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
W.A.No.243/2024
-:3:-
JUDGMENT
Dr. Kauser Edappagath, J.
The appellant is an Ayurvedic Hospital established in the
year 1998. The appellant claims to be a charitable trust providing
medical service to the public for charitable and philanthropic
purpose. The issue involved in this writ appeal pertains to claims
for exemption under section 3 of the Kerala Building Tax Act,
1975 (for short, 'the Act') in respect of a hospital building owned
by the trust.
2. The appellant was not granted with tax exemption as
specified under Section 3(1)(b) of the Kerala Building Tax Act,
1975 and was assessed with a one time building tax for an
amount of `13,42,800/-. The appeal and revision filed by the
appellant against this were rejected by the 3 rd and 2nd respondent
respectively. This was challenged by the appellant in W.P.
(C).No.32676/2022. The learned Single Judge by judgment dated
15/1/2024 dismissed the writ petition holding that the impugned
order does not suffer from any illegality or it violates any of the
legal or constitutional right of the appellant. Aggrieved by the
said judgment, this writ appeal has been filed by the appellant.
3. We have heard Adv. Prabha Jose, the learned Counsel
for the appellant and Sri.V.K.Shamsudheen, the learned Senior
Government Pleader.
4. It is not in dispute that the building in question is
functioning as a hospital. According to the appellant, the building
is constructed by using trust funds for carrying out its objectives;
it is principally used for charitable purposes as envisaged under
Section 3(1)(b) of the Act and, therefore, is entitled to exemption
from the payment of building tax. The Government is the
authority to decide on any question as to whether a building is
eligible for exemption from building tax. Sub-section (3) of
Section 3 of the Act provides that a decision of the Government
to that effect shall be final and shall not be called into question in
any Court of law. Section 3(1)(b) of the Act provides, among
other things, that nothing in the Act shall apply to buildings used
principally for charitable purposes. Explanation 1 under that
provision provides that the term "charitable purpose" in that sub-
section includes "relief of the poor and free medical relief". The
question relating to the interpretation of the terms "charitable"
and "charitable purpose" in Section 3(1)(b) of the Act in the
context of the provision of medical relief came up for
consideration before the two-Judge Bench of the Apex Court in
S.H. Medical Centre Hospital v. State of Kerala (2014 (1) KLT 316).
The Apex Court conclusively held that only building utilised for
providing free medical aid can be said to be used principally for
charitable purposes 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 charitable basis. A Full Bench of this
Court, thereafter, in St.Alphonsa Hospital and Others v. State of
Kerala and Others (2015 (1) KHC 542) followed the said decision.
Thereafter, another two-Judge Bench of the Apex Court in Lisie
Medical Institutions v. State of Kerala [(2017) 14 SCC 533]
doubted the correctness of certain observations contained in
S.H.Medical Centre Hospital (supra) and the matter was placed
before the three Judge Bench. The two Judge Bench in Lisie
Medical Institutions (supra) found that the earlier two-Judge
Bench decision in S.H.Medical Centre Hospital (supra) had taken
the statutory provision under the Explanation to Section 3(1) as
reading "charitable purpose" means "relief of the poor and free
medical relief" where the statutory provision actually read
"charitable purpose includes relief of the poor and free medical
relief". It was observed that the Explanation simply clarifies that
relief to the poor and free medical relief is one of the facets of
charitable purpose, and the use of the word "includes" indicated
that there could be other facets of charitable purpose as well.
The three-Judge Bench on reference (Lisie Medical Institutions v.
State of Kerala and Others, 2023 (3) KLT 585) found that in order
to qualify for exemption contemplated under Section 3(1) of the
Act, the building had to be "principally" used for charitable
purpose, by which term was meant that the dominant substantive
use to which the building was put to was for charitable purpose.
Interpreting Explanation 1 to Section 3(1) of the Act, the Bench
held that "the Explanation goes to indicate that 'charitable
purposes' includes and is, therefore, confined to the relief of the
poor and free medical relief" and that S.H. Medical Centre
Hospital (supra), having not noticed the use of the phraseology
"includes" in the Explanation, had to be overruled to the said
extent. Having clarified this, the three-Judge Bench remanded the
matter to the Division Bench of this Court for a fresh decision
after keeping open the factual analysis based on the
interpretation of Section 3(1). After remand, the Division Bench of
this Court (Lisie Medical Institutions v. State of Kerala 2023 (4) KLT
432) held that even if the phrase "charitable purpose" in
Explanation 1 is to be given a broad meaning on account of the
inclusive definition used therein, when it comes to medical relief
rendered in a hospital qualifying as a charitable purpose, the
hospital building will get exemption under the head "charity" only
if medical service is rendered free in such hospital buildings. It
was clarified that the said view applies only in those cases where
the charitable purpose sought to be established is the provision
of medical relief, for it is only in relation to the said activity that
the legislature stipulates that the relief provided must be free.
The said decision was followed by this Court recently in WP(C)
No.34154/2023 dated 11/12/2023 ( Dr.P.Madhavankutty Varier v.
State of Kerala and Others).
5. Coming to the merits of the case, as stated already,
the building in question was constructed by the trust to run an
Ayurvedic Hospital. The building is now used as an Ayurvedic
Hospital promoting ayurvedic treatments, cure and natural health
programmes. The appellant has an ayurvedic medicine
manufacturing unit also. Even the appellant does not have a case
that the building is principally used for providing free medical
relief. The Revenue (Special Cell) Department, audited the
accounts of the appellant which shows that the hospital is
charging huge amount towards the medical services/treatment
provided and people are not provided with medical service free of
charge. The Government vide order dated 10/5/2017 rejected the
request of the petitioner for exemption from payment of building
tax under Section 3(1)(b) of the Act. The reasons for rejecting the
appellant's claim had been set out in the order dated 10/05/2017.
It would suggest that for the financial years 2013-14, 2014-15
and 2015-16, the hospital collected huge amounts towards
various medical charges. Thus, the hospital was not doing any
charitable work and therefore is not entitled for exemption.
Further, two authorities have concurrently held that the plinth
area of the building is 3882.17 m.sq. In short, the appellant
failed to establish that the building was principally used for
providing free medical relief as required under the statutory
provision for inclusion under the definition of 'charitable purpose'.
The appellant also does not have a case that any other service
that qualifies as a charitable purpose under Section 3 of the Act is
rendered in the said building. The appellant failed to produce any
documentary evidence before the Government to show that the
hospital spent a substantial amount of its total income towards
the free medical relief. The Government, on the available
materials, found that the appellant cannot claim exemption from
the building tax based on the extent of medical relief that they
have been providing in the building in question. Such a finding of
fact cannot be upset except on the grounds of lack of materials or
gross insufficiency, which would result in groundless reasoning.
The appellant has failed to convince us also as to how the
building in question would qualify for the exemption under
Section 3 of the Act in respect of the medical relief provided in
the building in question. The writ appeal, therefore, fails, and it
is accordingly dismissed.
Sd/-
DR. A.K.JAYASANKARAN NAMBIAR
JUDGE
Sd/-
DR. KAUSER EDAPPAGATH
JUDGE
Rp
