Madras High Court
Sundaram Medical Foundation vs Chennai Metro Water Supply And on 26 April, 2021
W.P.Nos.20992 & 20993 of 2018
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 26.04.2021
CORAM
THE HONOURABLE MR. JUSTICE S.M.SUBRAMANIAM
W.P.Nos.20992 & 20993 of 2018
and
W.M.P.Nos.24642 & 24643 of 2018
W.P.No.20992 of 2018
Sundaram Medical Foundation,
Dr.Rangarajan Memorial Hospital,
ShanthiColonu, 4th Avenue,
Anna Nagar, Chennai – 600 040.
Represented by T.N.P.Durai,
Trustee & Director of Administration ..Petitioner
Vs.
Chennai Metro Water Supply and
Sewerage Board,
Rep.by Area Engineer – VIII,
No.227, 2nd Avenue, 12th Main Road,
Anna Nagar, Chennai – 600 040. ..Respondent
Prayer: Writ Petition filed under Article 226 of the Constitution of India, to
issue a Writ of Certiorari, calling for the records of records of the
respondent pertaining to the impugned demand notice bearing no.
08/100/04885/000 dated 09.08.2018 as well as the notice of disconnection
bearing no.11488 dated 09.08.2018 and quash the same.
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W.P.No.20993 of 2018
Sundaram Medical Foundation,
Dr.Rangarajan Memorial Hospital,
ShanthiColonu, 4th Avenue,
Anna Nagar, Chennai – 600 040.
Represented by its
Trustee & Director of Administration,
T.N.P.Durai. ..Petitioner
Vs.
The Commissioner,
Greater Chennai Corporation,
Rippon Buildings,
Chennai – 600 001. ..Respondent
Prayer: Writ Petition filed under Article 226 of the Constitution of India, to
issue a Writ of Certiorarified Mandamus, calling for the records pertaining
to Order dated 22.06.2018 bearing Z.O.VIII.R.D.C.No./ 1715/ 2018 issued
by the respondent and quash the same and consequently direct the
respondent to pass orders of exemption from property tax under Section
101(e) of the Chennai City Municipal Corporation Act, 1919 in respect of
its premises at Sundaram Medical Foundation, Dr. Rangarajan Memorial
Hospital, Shanthi Colony, 4th Avenue, Anna Nagar, Chennai – 600040.
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W.P.Nos.20992 & 20993 of 2018
For Petitioner : Mr.Srinath Sridevan
[in both W.Ps]
For Respondent
in W.P.No.20992/2018 : Mr.N.Ramesh
Standing counsel
[For CMWSB]
in W.P.No.20993/2018 : M/s.Karthikaa Ashok
Senior Standing counsel
[For Chennai
Corporation]
COMMON ORDER
The writ petitions on hand are filed by Sundaram Medical
Foundation, Dr.Rangarajan Memorial Hospital, seeking exemption from
payment of property tax under Section 101(e) of the 'Chennai City
Municipal Corporation Act, 1919' [in short, 'CCMC' Act], in respect of its
premises at Shanthi Colony, 4th Avenue, Anna Nagar, Chennai – 600 040.
The application made by the writ petitioner was rejected in proceedings
dated 22.06.2018 and the demand notice in proceedings dated 09.08.2018
are under challenge in the present writ petitions.
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2. The facts in nutshell as narrated by the writ petitioner reveals
that the petitioner / Sundaram Medical Foundation was created under and
by a Deed of Declaration of Trust dated 29.11.1990. On 07.01.1991, the
petitioner submitted application to the Government of Tamil Nadu, seeking
allotment of lands, for the purpose of setting up of hospital offering free /
concessional medical services. Another application was also sent on
29.03.1992. On 10.04.1992, the Government of Tamil Nadu issued
G.O.Ms.No.460, Revenue and allotted an extent of 2542 Sq.Mtrs of land at
Anna Nagar to the petitioner Medical Foundation for the purpose of setting
up a hospital.
3. The petitioner had written a letter to the respondents on
14.12.1994, pointing out that it is a Charitable hospital and is to be
exempted under Section 101(e) of the 'CCMC' Act. However, on 28.03.2002
and on 02.07.2005, the petitioner received demand notices from the 2nd
respondent. On 27.08.2007, the petitioner preferred an appeal in
M.T.A.No.21/2006 before the Learned Principal Judge, City Civil Court,
challenging the order dated 19.06.2006 in TAT.No.112 of 2006. The
Principal District Court quashed the demand and remanded the matter back
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to the Regional Deputy Commissioner. In proceedings dated 12.08.2008, the
respondents passed a non-speaking order dated 12.08.2008, declining to
grant exemption from payment of property tax. The writ petitioner filed
W.P.No.21084 of 2008 and this Court passed an order on 28.08.2008,
directing the respondents to re-consider the matter on merits. Once again,
the respondent passed a cryptic order, refusing to grant exemption from
payment of property tax in proceedings dated 27.01.2009. Again the writ
petitioner filed W.P.No.2383 of 2009 and the said writ petition was allowed
on 12.01.2015 and the matter was again remanded back to the
Commissioner, Corporation of Chennai, to examine the application for
exemption and pass appropriate orders. The Regional Deputy Commissioner
passed another cryptic order dated 17.12.2015, rejecting the claim for
exemption in proceedings dated 17.12.2015. The petitioner preferred an
appeal on 12.02.2016 to the Taxation Appellate Tribunal. The Taxation
Appellate Tribunal returned the appeal as not maintainable, stating inter
alia that as there was no assessment order as per Form 10 and therefore, the
appeal would not lie. Thereafter, an undated notice for demand and arrears
of demand on the 16th May 2017, calling the petitioner to pay an amount of
Rs.1,07,78,031/- vide Bill No.04885, the writ petitioner filed W.P.No.13489
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of 2017 and the High Court of Madras quashed the said demand notices
dated 17.12.2015 and allowed the writ petition on 08.08.2017, remanding
the matter back to the respondents. On 17.04.2018, the petitioner received a
communication from the respondents for an enquiry on 26.04.2018. On
26.04.2018, the petitioner submitted an interim reply and thereafter, on
07.05.2018, the petitioner submitted a detailed reply, furnishing reasons and
the documents for grant of exemption from property tax. However, the
respondents rejected the application, seeking exemption in proceedings
dated 22.06.2018 and the said order is under challenge in the present writ
petition.
4. The learned counsel for the writ petitioner mainly contended
that as per Section 101(e) of the 'CCMC Act', the petitioner Foundation is a
Charitable Hospital and therefore, they are entitled for exemption from
payment of property tax. To substantiate the said contention with reference
to the provisions of the Act, the learned counsel for the petitioner solicited
the attention of this Court with reference to the Proviso Clause to Section
101, which reads that “Provided that nothing contained in clauses (a), (c)
and (e) shall be deemed to exempt from property tax any building or land
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for which rent is payable by the person or persons using the same for the
purposes referred to in the said clauses.” Section 101 (e) of the 'CCMC Act'
contemplates “Charitable hospitals and dispensaries but not including
residential quarters attached thereto.”
5. Referring the said provisions, the learned counsel for the
petitioner reiterated that the petitioner / Sundaram Medical Foundation was
constituted by way of a Deed of Declaration of Trust, which is a Public
Trust. The contentions in the Trust Deed reveals that it is a charitable
hospital and therefore, there is no reason whatsoever to decline exemption
from payment of property tax. The Government itself considered the Deed
of Declaration of Trust and allotted land for construction of hospital and the
petitioner invested huge amount by constructing buildings and running
hospital and providing free treatment to poors and charges are collected
from the affluent patients for the purpose of maintenance of the hospital and
the petitioner Foundation is not running the hospital for profits. The income
derived from and out of the hospital is spent for the maintenance, purchase
of advanced equipments and for providing other facilities. Therefore, the
writ petitioner is doing charity by treating the poors at free of cost and thus,
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they are entitled for exemption of property tax. In support of the contention,
the learned counsel for the petitioner relied on the object of the Trust and
further, the Principal City Civil Court at Chennai, considered the nature of
the medical services rendered by the petitioner Foundation and observed
that the petitioner is eligible for exemption under the provisions of the Act.
However, the matter was remanded back to the Commissioner for fresh
consideration for exemption of payment from paying property tax, after
giving opportunity to the petitioner to submit evidences of beneficiaries and
other documents. However, the respondent/Commissioner passed a cryptic
order without even assigning any reason for the purpose of rejecting of the
application. Thus, the petitioner was forced to file writ petition after writ
petition and even the orders of this Court in the writ petition was not
complied with in its real spirit and once again, a cryptic order was passed.
Thus, the respondents have no valid reason to deny the claim of the writ
petitioner. Contrarily, they are going on passing orders without assigning
any reasons.
6. The learned counsel for the writ petitioner is of an opinion that
total number of free patients treated by the petitioner hospital are falling
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within the conditions stipulated in the Government order, granting land at
free of cost. Thus the petitioner has complied with the terms and conditions
stipulated in the Government order for the purpose of allotment of land and
even now, they are maintaining the charity by providing medical treatments
to the poor and needy persons.
7. The learned counsel for the petitioner solicited the attention of
this Court with reference to the nature of advanced treatments provided to
the poor patients with reference to the datas available.
8. The petitioner mainly relied upon the judgment passed in
W.P.No.13489 of 2017 dated 08.08.2017 filed by the petitioner / Sundaram
Medical Foundation, challenging the order of rejection passed earlier. The
learned counsel for the petitioner is of an opinion that this Hon'ble Court
adjudicated the merits elaborately in that writ petition and formed an
opinion that the petitioner is entitled for exemption. However, the matter
was remanded back on the ground that the respondents should consider the
documents and other evidences produced by the writ petitioner. But, the
respondent has not considered the observations made by this Court in its
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letter and spirit and rejected the application once again by assigning flimsy
reasons. The learned counsel for the petitioner contented that this Court
made strong observations regarding the eligibility for exemption to the writ
petitioner and the relevant paragraph relied on by the writ petitioner are
extracted hereunder:
“19. In the case of Society of Jesus, (supra), the
question which arose for consideration was, what is a
charitable hospital and dispensary for the purpose of Section
110(e) of the Karnataka Municipal Corporation Act, 1976.
After noting that nowhere in the Karnataka Act, Charitable
hospital and dispensary has been defined, the Court referred to
the dictionary meaning as well as Section 2(15) of the Income
Tax Act, which defines charitable purposes to include relief of
the poor, education, medical relief and the advance of any
object of general public utility. After discussing further on what
would mean 'charitable', the Court held as follows:
7..........The object of establishment and
continuance of the hospital and the dispensary must, for all
purposes, strictly conform to the requirements of what is
understood as 'charity' and a 'charitable' act. Therefore,
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while considering the question whether a hospital or a
dispensary is a charitable hospital/dispensary or not, what is
required to be considered is as to what is the object of
establishing such a hospital/dispensary and as to how it is
being run and what is the purpose of its continued existence
whether it is meant to relieve the hardship and extends
medical facilities to the poor and the needy or it is meant to
oblige the rich and the affluent who do not require any
financial assistance in the form of free medical treatment or it
is being run as a commercial venture; and whether such
hospital/dispensary has been established and is being
continued to support the needs of any particular caste or a
religious faith. In my view, three conditions, which are
required to be satisfied to get the benefit of exemption under
Section 110(e) of the Act are, (1) the doors of such
hospitals/dispensaries should be always kept open to all
persons irrespective of any caste, creed, religious faith or
sects; (2) such persons should be poor, needy and deserving
persons who, on account of financial incapacity, are not in a
position to get medical aid by paying money; and (3) the
process of selection of patients for treatment among the three
classes, referred to above, must be objective, transparent, fair,
reasonable and free from any arbitrariness. That does not
mean that for the purpose of running a charitable
hospital/dispensary, if the facilities in the hospital are made
available to the affluent and rich patients and if they are
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charged for the services rendered with a view to organise
funds required to such a hospital, such a hospital will not lose
the characteristic of a charitable hospital/dispensary. I am
unable to accede to the contention of Sri Haranahalli that it
is only such of those hospitals and dispensaries which totally
give free medical aid and which do not collect any charges
from patients either in-patient or out-patient, which can be
treated as charitable hospitals and dispensaries and are
entitled for exemption under Section 110(e) of the Act. It is
necessary to point out that in a society like ours, where the
country is still a developing country and where large sections
of people are poor and not free from hunger and disease, the
State alone, out of its revenue, cannot provide free medical
aid to all those poor persons who are in need of it. Therefore,
presumably, keeping that in view and with a view to
encourage charitable attitude among the philanthropists, a
provision like Section 110(e) of the Act has been made
providing for exemption from payment of property tax in
respect of a building and land used as charitable
hospital/dispensary. There cannot be any doubt that it is only
with a view to facilitate medical aid to the poor and needy
and with a view to reduce financial burden of such charitable
hospitals and dispensaries, such a provision has been made.
The burden of running a charitable hospital and dispensary
which is established and continued for the purpose of giving
free/subsidised medical aid, can be reduced by various
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methods, (1) by granting exemption from payment of property
tax in respect of the buildings solely used as charitable
hospital/dispensary; (2) by raising donations from the rich
and affluent; (3) by free service rendered by the doctors and
other social groups in the hospital. The resources raised from
all these may not be sufficient to cater to the needs of large
sections of poor ailing patients who require medical treatment
and that too, with the high degree of competency and
proficiency and infrastructure developed with all the modern
facilities established. For this, one of the modes of raising
funds could be by making available some portion of the
facilities available in the hospital to affluent and the rich
patients and charging them for the services and the treatment
given to them. Therefore, if the object of establishing and
running a hospital and its continued existence, is to give
medical aid to the poor and the deserving either totally free
or to a large extent subsidised, if such a hospital collects
substantial charges from the affluent and rich patients put of
some portion of the facilities available in the hospital
extended to them, in my view, as observed earlier, such
hospitals and dispensaries cannot be considered as not
charitable hospitals and dispensaries.”
20. In Municipal Corporation of Hyderabad Vs.
Hyderabad Race Club, reported in AIR 1987 92, the Hon'ble
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Supreme Court laid down what would be the proper test to find
out whether the income from the Race Club was used for a
charitable purpose. It was held that the test to apply is to seek
an answer to the question; “to what use is, the property put or
for what purpose is the property put”. To ascertain whether
such occupation or user is for charitable purpose. After
referring to Section 202 (1) (b) of the Income Tax Act, it was
held that the expression “charitable” in the context of the said
Section means a benevolent activity calculated to benefit the
poor or the deprived. The Court after taking note of the above
referred decision as well as certain English decisions held as
follows:
“8........To my mind, it appears that if a hospital
extends free treatment around 50 (fifty) per cent with little
variation to the poor, needy and other patients who, on
account of financial constraints, are not able to meet the
medical expenses, and the remaining 50 (fifty) per cent or
around that, charges are collected from others who can
afford to pay, such a hospital or dispensary, would satisfy the
requirement of a charitable hospital and dispensary.
However, it is needless to observe that the entire income
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derived by charging the patients, as stated above, should be
solely utilised by the hospital/dispensary for the benefit of the
hospital and for the benefit of the poor and the deserving,
needy patients. The hospital is permitted to charge and
collect money from the rich and affluent only with a view to
make the hospital viable and with a view to get the best and
qualitative treatment to the poor and the needy whenever it is
required by them. Insofar as outpatients are concerned, it
would not be permissible for the hospital to limit the
extension of the medical facility to a limited number of poor
patients. It has to be for all those who approach the hospital
seeking free treatment. However, insofar as in-patients are
concerned, it could be subject to the availability of the beds
and other facilities in the hospital. The funds generated by
the hospital by charging the patients has to be utilised, as
noticed by me earlier, for the benefit of other poor and
deserving patients. This does not mean that an additional
income earned, in a particular year, cannot be carried over
for future development and to be spent in a near future i.e.,
within a year or two of such accumulation.”
9. The learned counsel for the petitioner relied upon the case of
Society of Jesus, which is referred by this Court in W.P.No.13489 of 2017
and reiterated that Section 110(e) of the Karnataka Municipal Corporation
Act, 1976 is pari materia to Section 101(e) of the Chennai City Municipal
Corporation Act, 1919. The Hon'ble Supreme Court of India made an
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observation that the “object of establishing such a hospital/dispensary and
as to how it is being run and what is the purpose of its continued existence
whether it is meant to relieve the hardship and extends medical facilities to
the poor and the needy or it is meant to oblige the rich and the affluent who
do not require any financial assistance in the form of free medical treatment
or it is being run as a commercial venture. ...........if the facilities in the
hospital are made available to the affluent and rich patients and if they are
charged for the services rendered with a view to organise funds required to such a
hospital, such a hospital will not lose the characteristic of a charitable
hospital/dispensary.”
10. Relying on the said portions, the learned counsel for the
petitioner strenuously emphasized that the petitioner/Medical Foundation is
satisfying all the criterias as contemplated under the provisions of Section
101(e) of the 'CCMC Act' and therefore, the reasons stated in the order
impugned are untenable.
11. This Court in the above said W.P.No.13489 of 2017,
elaborately considered the scope for grant of exemption and the Hon'ble
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Supreme Court in the case of Society of Jesus, also considered the
principles to be followed for grant of exemption and thus, the writ petition
is to be allowed.
12. The learned counsel appearing on behalf of the respondent/
Chennai Corporation raised an objection in respect of the contentions made
on behalf of the writ petitioner in entirety.
13. The learned counsel for the respondents made a submission
that even as per the official website of the petitioner/Sundaram Medical
Foundation, they have stated as follows:
About us
Sundaram Medical Foundation was established in 1990
by Dr.S.Rangarajan with the help of M/s.Sundaram Finance
Group of Companies as a Community Centred Hospital,
following the best tradition of medical service. Dr.Rangarajan's
vision was to provide Quality Health Care which is cost-effective
and community centred. Today SMF is a multi-specialty hospital
with state-of-the-art health care facilities providing services to
New Born to Nineties under one roof.
Vision:
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*SMF will provide Quality Health Care which is cost-
effective and Community-centered in an environment which is
clean, caring and responsive to the needs of the patient.
*SMF will serve as a Role Model of Health Care
delivery system in India.
Accreditation
*Accredited under NABH (National Accreditation
Board for Hospitals & Health Care providers).
* ISMS: First Hospital in India to be certified under the
standard ISO/IEC 27001:2013—Information Security
Management Systems.
* First NABL (National Accreditation Board for Testing
and Calibration Laboratories) certified hospital based
laboratory services in Biochemistry, Microbiology, Clinical
Pathology and Histopathology in Chennai under the......
* ISO 9001:2008 Certified Organisation.
14. Though in the official website of the Sundaram Medical
Foundation, it is stated that the Quality Health Care which is cost-effective
and community centred has been stated as vision, the actual cost charged for
treatment is not made available in the website of the petitioner. However,
the rate of hospital wards at Sundaram Medical Foundation verified on
15.04.2015 was published by www.medifee.com. The learned counsel
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appearing for the respondents reiterated that the charges collected for
Private Ward Super Deluxe is Rs.7,500/- even during the year 2015. It is
contended that the said medifee.com is publishing the rates prescribed by
various hospitals across the country. Thus, the said website is to be relied
upon. However, the said contention is disputed by the respondents by
stating that it is not the official website of the petitioner, therefore, cannot
be relied upon. This Court is of the considered opinion that irrespective of
these factors, the Court has to examine, whether the petitioner is falling
within the category of charitable hospital within the meaning of the Act or
not.
15. The learned counsel for the respondents with reference to the
judgment of this Court in W.P.No.13489 of 2017, made a submission that
this Court has laid down the principles to be followed for the purpose of
grant of exemption. However, the Chennai Corporation is bound to consider
the facts and circumstances with reference to the principles laid down by
this Court. This Court has not considered the disputed facts. This Court
remanded the matter back to the Corporation for fresh adjudication by
granting liberty to the respondent Corporation to consider the actual facts
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and circumstances prevailing in the petitioner Sundaram Medical
Foundation with reference to providing of treatment to poor, needy and
deserving people. The Corporation officials had considered all the facts and
circumstances and considered the nature of treatment, number of poor
patients treated, facilities provided, charges collected from the patients, Bed
charges etc., and formed an opinion that the petitioner is not entitled for
exemption from payment of property tax and accordingly, rejected the claim.
16. The learned counsel for the respondents is of an opinion that
the impugned order passed in proceedings dated 22.06.2018 reveals that the
documents produced by the petitioner were considered by the authorities
and the finding was given by stating that the “treatment provided by the
Sundaram Medical Foundation is not completely free of cost. The trust deed
aimed at giving free treatment to economically weaker sections and not for
all the public. Further, the petitioner have not produced any material
evidence to prove that the activities of the hospital are completely
charitable. Hence, the grant of exemption from payment of property tax,
under Section 101 (e) of the 'CCMC Act 1919', not be considered and also
rejected.”
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17. Further, the reasons given by the respondents is that “you have
not followed the terms and conditions laid down by the Government in the
1st G.O cited, for which you have not produced any valid and strong
document for providing free treatment to 30% outpatients and reserving
15% of total beds in the Hospitals for poor families, and giving free
treatment to them, ever since its inception. Instead you have produced a list
of beneficiaries being treated in the year of 2014-2015, which is not an
adequate and sufficient document to prove your claim.”
18. The respondents formed an opinion that even the conditions
mentioned in G.O.Ms.No.460 dated 10.04.1992 has not been complied with
by the petitioner. They are collecting higher charges for providing beds,
treatment and other charges from the patients. Thus, the petitioner is not
entitled for exemption under the provisions of the Act. The learned counsel
for the respondents, at the outset, contended that the petitioner has not
established that they are falling within the definition of charitable hospital
under the Statute and therefore, the respondents have rightly rejected the
application and thus, the writ petition is to be dismissed.
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19. Payment of property tax is the law. Interpretation of Tax
Law must be in its strict construction. Application for exemption is a
right. Granting exemption is a concession. Grant of exemption must be
an exception. Grant of exemption should be strictly in consonance with
the provisions of the statutes with reference to the facts established.
20. Based on the above principles, the contentions raised by the
respective parties to the lis on hand are to be considered by this Court. The
Deed of Declaration of Trust dated 29.11.1990 provides that “Whereas the
author of the Trust is desirous of providing medical relief and facilities to
the poor and the needy irrespective of caste, creed and religion either free
of cost or at concessional rates and to others on such terms and conditions,
but not for purposes of profit, as may be specified by the Trustees from time
to time.”
21. Thus, the trust deed itself contemplates “either free of cost or
at concessional rates”. Therefore, this Court is bound to consider the facts
and circumstances as well as the charges collected by the petitioner
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Foundation for providing treatment in respect of other patients, who are not
poors. In other words, what is necessary to be considered by this Court is
that whether the petitioner is providing free treatment to few poors, so as to
satisfy the conditions stipulated by the Government in order to retain the
valuable land allotted in the prime location in Chennai City or they are
providing complete charity as required under the provisions of Section
101(e) of the 'CCMC Act'. These factors are of paramount importance for
the purpose of arriving a conclusion, whether the petitioner is eligible to
avail the benefit of exemption under the provisions of Section 101(e) of the
'CCMC Act.'
22. Section 2(15) of the Income Tax Act, 1961 defines
“Charitable purpose” as includes relief of the poor, education, medical
relief, and the advancement of any other object of general public utility.”
23. The learned counsel for the petitioner argued that Charitable
hospital does not mean that the treatment must be provided to all patients at
free of cost. It is sufficient if portion of poor patients are treated at free of
cost and for the maintenance of hospital, the petitioner is entitled to collect
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treatment charges from patients, who are capable of paying the treatment
charges. In this regard, he relied on the judgment of the Apex Court of India
in the cases of “Society of Jesus” and contended that, if the affluent and rich
patients are charged for the services rendered with a view to organise funds
required to such a hospital, such a hospital will not lose the characteristic of
a charitable hospital/dispensary.
24. This Court is of the considered opinion that the observations
made by the Hon'ble Supreme Court of India are relatable to the facts of that
case and every case should be considered with reference to the particular
facts and circumstances. The observations made cannot be applied directly,
so as to defeat the very concept of Charitable hospitals as contemplated
under the Statute. Thus, the observations are to be read and applied along
with the facts and circumstances of each case to form an opinion, whether
the hospital can be termed as a Charitable hospital for the purpose of grant
of property tax exemption. Thus, the contentions, as it is, cannot be adopted.
However, the said contentions of the petitioners are to be considered strictly
with reference to the facts and circumstances established for the purpose of
claiming exemption.
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25. Undoubtedly, this Court also made observations that
collecting medical charges from rich patients will not change the
characteristic of a Charitable hospital. However, to what extent, the poors,
needy and deserving people are treated at free of cost; what all are the
charges collected even from other patients; Whether would constitute the
petitioner Foundation as a Charitable hospital or not is to be decided.
26. The respondents relied on the proceedings of the Regional
Deputy Commissioner (Corporation of Chennai) dated 17.12.2015 and has
stated that the writ petitioner initially accepted the property tax as assessed
by the respondent Corporation with effect from 01/1996-97 as per GRS the
tax is Rs.62,963/-. The tax was enhanced to Rs.1,07,835/- with effect from
2/1998-99 as per Section 137 of M.C.M.C.Act.
27. The learned counsel for the respondents brought to the notice
of this Court that all along from the year 1996, the petitioner / Sundaram
Medical Foundation was paying the property tax till the year 2005, when a
revised demand notice was served, demanding a sum of Rs.4,32,227/-. Thus,
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the petitioner had accepted the assessment of property tax as assessed by the
respondent / Corporation, knowing the fact that they are not Charitable
Hospital falling within the ambit of Section 101(e) of the 'CCMC Act' and
only after enhancement, they filed an application seeking exemption and
thus, the writ petition is to be rejected.
28. Even the Regional Deputy Commissioner in proceedings
dated 17.12.2015, formed an opinion that the petitioners are giving only
15% of the free medical treatment for the poor people and therefore, their
case cannot be considered for the purpose of grant of exemption. The
petitioners charging all fees leads to 85% from the patients. Thus, the
petitioner/ Sundaram Medical Foundation cannot be termed as 'Charitable
Hospital' within the meaning of Section 101(e) of the 'CCMC Act.'
29. This Court is of the considered opinion that the Deed of
Declaration of Trust itself provides that either free of cost or at concessional
rates. It is an admitted fact that few people are treated at free of cost and
others are treated by collecting medical charges. Medical charges as well as
the tariff for beds are the relevant factors to be considered for the purpose of
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forming an opinion, whether the petitioner can be termed as Charitable
Hospital or not.
30. The General meaning for the word “Charity” is generosity and
helpfulness, especially towards the needy or suffering. An institution
engaged in relief of the poor, charitable organization is dedicated to the
General Public purpose, more specifically, for the benefit of needy people,
who cannot pay for benefits received. The charitable institution does not
distribute earnings for the benefit of private individuals. Thus, the character
of a Charitable institution must be considered with reference to the facts and
circumstances as well as the manner, in which, such institutions are being
run by such trust or person.
31. In this regard, it is contended on behalf of the petitioner that a
Charitable medical institution need not be wholly charitable for the purpose
of Section 101(e) of the 'CCMC Act' and even as per the Government order,
allotting land to the petitioner, ratio has been fixed for providing service to
the poor and needy people. He relied on the judgment of the Hon'ble
Supreme Court in the case of Society of Jesus and reiterated that the
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petitioner may charge for the services rendered with a view to organize
funds required to such hospital.
32. Thus, facts and circumstances of each case plays a pivotal
role, for the purpose of applying the principles and therefore, this Court is
of an opinion that the contention raised that the principles to be applied in
all the Charitable institutions cannot be accepted.
33. The genuinity of the claim, the nobility of the medical services
and the extent to which, such services are provided for poor, needy and
deserving people and if at all the medical services provided, dominantly to
the needy, poor and deserving people, then alone, an institution can be
characterized as a Charitable Medical Hospital and not otherwise.
34. In the present case, the learned counsel for the petitioner made
a submission that a holistic approach is required. Equally such a holistic
approach is imminent for Revenue also. Thus, the holistic approach towards
the institution alone would result in neutralizing the provisions of the Act
more specifically, regarding property tax. As stated above, exemptions are
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exceptions and to be granted discreetly, if the applicant is capable of
establishing that they are providing medical services dominantly to the poor,
needy and deserving people of the society.
35. Large number of charitable institutions are functioning in our
great Nation. The genuinity and the manner of functioning as well as the
services provided to the poor, needy and deserving, are to be assessed for
the purpose of extending exemption from property tax, income tax, etc.,
Under the guise of running a charitable medical institution, if huge
collections are made for the services provided, then one cannot trust upon
the genuinity of the Charitable institution and under those circumstances,
even the benefit of doubt is to be extended in favour of the Revenue and not
to the Charitable Medical institution. It is to be re-emphasized that the
benefit of doubt in this regard, must be extended to the Revenue and not to
individual.
36. This Court is of the strong opinion that it is for the charitable
institution to establish the facts and circumstances. In the present case, the
petitioners have provided some data, showing that they are providing
medical services to the poor, needy and deserving people. The data provided
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is extracted hereunder:
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37. The manner, in which, the statistics is provided by the
petitioner, shows that they are providing services to the poor, needy and
deserving as per the Government order in G.O.Ms.No.460, Revenue dated
10.04.1992 issued under Tamil Nadu Urban Land (Ceiling and Regulation)
Act 1978. Under the said Government Order, a prime property in Chennai
City, measuring 2452 Sq.Mtrs at Anna Nagar was allotted for setting up of a
hospital. The said Government Order stipulates that the percentage of
reservation of beds for free treatment blocking to the poor family is reduced
from 25% to 15%.
38. The petitioners have stated that they have complied with all
the terms and conditions stipulated in the Government Order and therefore,
they are entitled for exemption. The learned counsel for the petitioner made
further submissions that even the Government has not initiated any action
regarding any such violation of the Government Order and therefore, the
Corporation cannot go into these facts as the petitioner has fulfilled the
norms prescribed in the Government Order, while allotting land at free of
cost.
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39. Pertinently, the above factors were considered by the Regional
Deputy Commissioner in proceedings dated 17.12.2015 itself. In the said
order, the number of units, rate per unit, usage, occupancy and type of
construction are elaborately considered. The Regional Deputy
Commissioner made a finding that “Sundaram Medical Foundation Property
tax was assessed to tax by Corporation Half yearly w.e.f.1/1996-97 as per
GRS the tax is Rs.62,963/- and the tax was enhanced to Rs.1,07,835/- w.e.f.
2/1998-99/as per Section 137 of M.C.M.C.Act and a revised demand Notice
was issued to the petitioner on 02.07.2005, demanding a sum of
Rs.4,32,227/-. By challenging the said demand Notice, the petitioner /
Sundaram Medical Foundation filed an appeal before the Taxation Appeal
Tribunal and the same was dismissed by the Appellant Authority.
Subsequently, the petitioner filed M.T.A 21/2006 before the Principal Judge,
City Civil Court, Chennai. And the matter was remanded back to
Commissioner, Corporation of Chennai for fresh consideration. With these
observations, the Regional Deputy Commissioner, Chennai Corporation,
passed a final order, holding that “On due inspection by the official
concerned and scrutinize the writ petitioner's documents, evidences, it is
found that the above Sundaram Medical Foundation cannot be exempted
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from the payment of Property Tax under Section 101(e), exempting category
as per Chennai City Municipal Corporation Act 1919. The writ petitioner
itself accepted that they are giving only 15% of the free Medical
treatment for the poor people. The exemption from payment of
property tax cannot be considered, since the writ petitioner's charging
all fees leads to 85% from the patients.”
40. The above facts are not controverted and this Court has
considered the online web portal of the writ petitioner / Sundaram Medical
Foundation and the facts were extracted in aforementioned paragraphs.
Perusal of the above details regarding the charges collected from the
patients, any prudent man will form an opinion that there is no reason to
believe that the petitioner is running a Charitable Medical Institution by
dominantly providing free medical services to the poor, needy and
deserving citizen of this great Nation. It is to be remembered that any
institution predominantly providing medical services at free of cost to the
poor, needy and deserving people, alone, may be granted with the benefit of
exemption. The character of “predominant services” to be interpreted as if
the services provided to poor, needy and deserving are not only provided to
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such poor, needy and deserving people, and they must have free access to
such charitable medical institutions for the purpose of taking treatment.
Thus, it is to be construed as poor, needy and deserving patients / citizen of
this great Nation, must have free access to such Charitable institution and
such institution should not refuse admission in the hospital at any
circumstances to the poor.
41. In the absence of any such free access to poor, needy and
deserving patients in charitable medical institution, one cannot come to the
conclusion that such institutions are doing charity to poor, needy and
deserving for the purpose of seeking exemption of property tax under the
Statute. Tax being Revenue of the State, strict interpretation of law is not
only imminent, but a constitutional mandate. Therefore, the benefit of doubt
must always be extended to the Revenue and not to the individual as
claimed by the petitioner.
42. We, the people of India, are generous in recognizing and
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appreciating the Charitable institutions. However, for the purpose of
granting exemption of payment of tax, charity extended to be established to
such an extent, so as to form an opinion that the access to poor, needy and
deserving for treatment are not only provided, but they are allowed to get
admission without any restrictions or hindrance and free access is provided.
43. On perusal of the official website of the petitioner/Sundaram
Medical Foundation, the same would reveal that “Sundaram Medical
Foundation was established in 1990 by Dr.S.Rangarajan with the help of
M/s.Sundaram Finance Group of Companies as a Community Centred
Hospital, following the best tradition of medical service. Dr.Rangarajan's
vision was to provide Quality Health Care which is cost-effective and
community centred. Today SMF is a multispecialty hospital with state-of-
the-art health care facilities providing services to New Born to Nineties
under one roof”. The said informations provided about the Institution would
reveal that free access to the poor, needy and deserving patients are either
restricted or denied. The bed charges and other charges as made available in
the website namely www.medifee.com is not accepted by the petitioner. This
Court is of the opinion that the respondent/Corporation Officials conducted
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an inspection and made a finding that the petitioner/Hospital is collecting
huge charges which is on par with the charges prescribed by the reputed
Private Hospital in Chennai City. Based on the inspection, the Corporation
Officials formed an opinion that the petitioner/Sundaram Medical
Foundation is not doing charitable services so as to grant exemption from
payment of property tax. Thus, irrespective of the fact whether the petitioner
is accepting the rates for hospital wards at Sundaram Medical Foundation
published by www.medifee.com is correct or incorrect, the very facts
regarding the inspection conducted by the Corporation Officials and their
findings would show that there is no free access to the poor, needy and
deserving patients in the petitioner/Hospital and the charges collected are
also competitive and on higher side.
44. In fact, petitioners are predominantly providing services to
rich and affluent. Thus, this Court is inclined to draw factual inference that
the petitioner / Medical Foundation is providing free medical services to the
poor, needy and deserving people restrictedly and to the limited extent for
the purpose of retaining the free land allotted by the Government in
G.O.Ms.No.460, Revenue dated 10.04.1992. The value of the land in Anna
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Nagar Location is running in several crores. Such a valuable land is allotted
at free of cost in favour of the petitioner to run the medical institution and
under the guise of maintenance of building and other infrastructures, the
petitioners are collecting huge charges from the patients and providing least
services to the poor and needy. Thus, such factors are to be inspected by the
Government for the purpose of ascertaining, whether the Charitable
institutions are functioning for the welfare of the poor, needy and deserving
people and in the event of any contra facts, all suitable actions are to be
initiated.
45. As far as the provisions of the Chennai City Municipal
Corporation Act is concerned, it is unambiguous that Charitable Hospitals
are eligible for exemption. However, the character of the Charitable
Hospitals are to be scrutinized as the loss of Revenue is detrimental to the
interest of public at large. Thus, the authorities are bound to be cautious,
while scrutinizing all material facts and circumstances, for taking a
decision. In the present case, the respondents have conducted inspection
regarding the functioning of the petitioner / Medical Foundation and
formed an opinion that they are providing free Medical services to 15% of
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the patients and they are collecting charges from 85% and further, the
charges collected from the patients are comparable on par with the
established reputed Hospitals in Chennai City.
46. In the Deed of Declaration of Trust, it is contended that the
medical services are to be provided either free of cost or at concessional
rates. However, the petitioner/Sundaram Medical Foundation cannot be said
to be providing medical services at concessional rates. In respect of poor,
needy and deserving patients, there is no free access to the hospital as the
manner in which the hospital website shows, would reveal that the access to
the poor are either restricted or denied. Thus, the petitioner/Foundation is
not honoring even in terms stipulated in the Deed of Declaration of Trust.
Thus, it cannot be construed as if the petitioner is providing medical
treatment at free of cost to the large number of poor, needy and deserving
patients.
47. The Declaration of Trust of Deed unambiguously portrays that
the medical services to be provided at free of cost or concessional rates.
Though there is a clear indication that the rate fixed must be concessional,
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even for middle class, who are capable of paying medical charges, then the
whole purpose and object of the Deed of Trust is to ensure that free medical
services are provided to the poors in general and services also may be
provided at concessional rates. However, in both the cases, there is a clear
indication that the medical services is to be provided largely and
predominantly to poor, needy and deserving people alone. When such a
character is missing, then the writ petitioner Foundation is not entitled to get
exemption. During the inspection, it is found that the petitioner is providing
treatment to rich and affluent, but certainly not at concessional rate.
48. Thus, the petitioner is not entitled to avail the benefit of
property tax exemption under Section 101(e) of the Chennai City Municipal
Corporation Act. Consequently, they are not entitled to get exemption from
payment of water and sewerage Tax and charges.
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49. Accordingly, both the writ petitions fail and stand dismissed.
No costs. Consequently, connected miscellaneous petitions are closed.
26.04.2021
Kak/ssb
Index : Yes/No
Speaking /Non-speaking order
To
1. Chennai Metro Water Supply and
Sewerage Board,
Rep.by Area Engineer – VIII,
No.227, 2nd Avenue, 12th Main Road,
Anna Nagar, Chennai – 600 040.
2. The Commissioner,
Greater Chennai Corporation,
Rippon Buildings,
Chennai – 600 001.
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W.P.Nos.20992 & 20993 of 2018
S.M.SUBRAMANIAM, J.
Kak/ssb
W.P.Nos.20992 & 20993 of 2018
26.04.2021
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