9911796707
TMI Blog2012 (10) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... and trust fund of Shri Dharamsinh Desai Foundation, corporate bodies and well-wishers. The hospital was named as Dharamsinh Desai Memorial Methodist Institute of Cardiology and Cardio-vascular Surgery. For the purpose of the hospital, the petitioner imported Cardiac Catherisation Laboratory from Siemens, Germany which was used for coronary angiography as well as for angioplasty. It is used to diagnose heart defects, to take blood samples and pressure readings from different parts of the heart and for imagination of coronary arteries, heart chambers, and major blood vessels and also for treatment purposes like Balloon Valvuloplasty etc. 2. By its letter dated 18th March, 1994, the second respondent granted Customs Duty exemption certificate for import of the aforesaid equipment. Accordingly, the equipment was duly imported and cleared without payment of duty in accordance with the exemption granted under Customs Notification No.64/1988 dated 1st March, 1988. Though the date of arrival of the subject equipment at Bombay Port was 9th September, 1993, it was cleared and brought to Nadiad much later. On account of non-receipt of structural plans necessary for installation from Bombay a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted by the petitioner and that it was not providing free treatment on an average to at least 40% of the outdoor patients. The petitioner gave reply to the show-cause notice on 22nd March, 1998 contesting the factual foundations alleged in the show-cause notice. On 5th March, 1998, the petitioner applied to the second respondent through the Director of Health Services, Government of Gujarat for issuance of Installation Certificate as postulated in the notification. In response to the said application, by letter dated 20th May, 1998, the second respondent called upon the petitioner to furnish information to enable it to exempt the case. The petitioner furnished all the relevant data regarding the importation, installation and working of the subject equipment by its letter dated 1st June, 1998. The Government of Gujarat after due verification also recommended the grant of installation certificate to the petitioner by its letter dated 21st July, 1998. The petitioner has thereafter continued to operate the subject equipment. It is the case of the petitioner that the hospital has been organising regular medical camps wherein it is providing free medical facilities. The details regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show-cause notice on 20th October, 2003 contesting the factual foundations alleged in the notice and also submitted various documents in support of its contention. By an order dated 26th March, 2004, the second respondent rejected the request of the petitioner to categorise it under Category-1 of the Customs Notification No.64/1988 and for issuance of installation certificate. Under the said order, the Customs Duty Exemption Certificate issued for the subject equipment on 18th March, 1994 was also withdrawn on the ground that since the petitioner was a Category-4 institution at the time it had applied for exemption, when it starts functioning, it had to relate to Category-2 as per the undertaking given by it and that the petitioner had failed to substantiate fulfilment of the conditions stipulated under Category-2 within two years from the date of issuance of the certificate. Apprehending that on the basis of the cancellation certificate, the third respondent was proceeding to adjudicate the show-cause notice dated 19th February, 1998 and confirm the demand raised therein without further notice to the petitioner, the petitioner has filed the present writ petition under Articles 226 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ospital of the petitioner falls in Category 2 of the hospitals mentioned in the table to which the conditions incorporated in Clause (1), (b) and (c) were applicable and which did not apply to a hospital falling under Category-1 or even to a hospital which was in the process of establishment which when it starts functioning would fall in Category 1. If such opportunity was given, the petitioner could have pleaded before the concerned authority its case that it was a hospital falling in Category-1 and that even the hospital which was in the process of establishment and which fell under Category-4 was, when it starts functioning, to be run in the manner contemplated in Category- 1, and was a hospital of such nature and that the conditions of free treatment did not apply to these categories. It was pointed out that the court had specifically observed that the respondent authority had without considering the significance of the categorisation of hospitals and the effect of clause (iv) of Category-4 read with Category-1 straightaway proceeded to consider the matter in light of the conditions which were attached to the hospitals falling in Category-2. The court accordingly held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n April, 2004 on the alleged figures of 1995-96. According to the learned counsel, the petitioner was in the process of establishing a unit, named Dharamsinh Desai Memorial Methodist Institute of Cardiology and Cardiovascular Research, through two registered societies and trusts, namely, - Gujarat Methodist Church Cardio Thoracic and Vascular Research Society and both are charitable trusts and accordingly registered with the proper authorities. This means that the activity carried out by the petitioner is of a hospital which is run or substantially aided by charitable organisation, which may be approved by the concerned authority. This being the position, the hospital of the petitioner falls under Category-1 of the table appended to Notification No.64/1988. It was submitted that assuming without admitting that the petitioner has failed to provide free services to at least 40% of its outdoor patients and that it has failed to provide 10% beds for indoor patients of specified low income, but the duty is not demandable on the equipment in question inasmuch as the said conditions are applicable to the hospitals falling within Category-2 whereas the case of the petitioner is likely to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of Faridabad CT. Scan Centre vs. D.G. Health Services and others, (1997) 7 SCC 752, to submit that the decision of the Supreme Court in Mediwell Hospital & Health Care (P) Ltd. vs. Union of India, (1997) 1 SCC 759 has been held to not lay down the correct law. The decision of the Supreme Court in the case of Comptroller and Auditor General of India vs. K.S. Jagannathan, (1980) 2 SCC 679, was relied upon for the proposition that in exercise of its jurisdiction under Article 226, the High Court can issue a writ of mandamus or a writ in the nature of mandamus or pass orders and give directions to compel the performance in a proper and lawful manner of the discretion conferred upon the government or a public authority, and in a proper case, in order to prevent injustice resulting to the concerned parties, the court may itself pass an order or give directions which the government or the public authority should have passed or given had it properly and lawfully exercised its discretion. It was, accordingly, urged that this court may pass appropriate orders which otherwise ought to have been passed by the Government or the concerned public authority. 7. Opposing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... light of the aforesaid facts. It was submitted that the respondent had acted strictly in terms of the observation of the Supreme Court in the case of Mediwell Hospital & Health Care Pvt. Ltd. vs. Union of India (supra) and that the institution was not found to be fulfilling the import conditions, and hence, the benefit of the exemption notification had rightly been withdrawn by the impugned order. 7.2 Next it was submitted that pursuant to the directions issued by this court vide its order dated 6th July, 2003, the case of the petitioner has been duly considered and disposed of and thus the action of the respondents is legal and sustainable in law. It was reiterated that the petitioner institution has given an undertaking certifying that the hospital when it starts functioning, will be relatable to a hospital covered under Category-2 under Customs Notification No.64/1988 and that categorisation under Category-1 is applicable to institutions as may be certified by the Ministry of Health and Family Welfare to be run substantially aided by such charitable organisation as may be approved, which condition is not satisfied by the petitioner institution. Insofar as the question of instal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty exemption certificate which was issued on 18th March, 1994. The aforesaid order came to be challenged before this court by way of a writ petition being Special Civil Application No.1192/1999. The said petition came to be allowed by quashing the order impugned therein and directing the second respondent to reconsider the application of the petitioner for issuance of installation certificate and to take an appropriate decision thereon in accordance with law. In the said decision, this court held as follows:- "7. It is clear on a plain reading of the aforesaid notification that mere mention of Category-4 in the exemption certificate did not preclude consideration of the question whether the hospital in the process of establishment to which Category-4 applied would when it starts functioning become a hospital of the type falling in Category 1, 2 or 3 of the Table. In other words, it was open for the petitioner to show that when the hospital which was in the process of being established would when it starts functioning become a hospital run or substantially aided by a charitable organisation. The notification shows that if the hospitals fall in Category-1 of hospitals named in the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, it appears that the respondent no.2 had proceeded on the footing that the hospital of the petitioner falls in Category-2 of hospitals mentioned in the Table to which the conditions incorporated in the Clauses (1), (b) and (c) were applicable and which did not apply to a hospital falling under Category-1 or even to a hospital which was in the process of establishment which when it starts functioning would fall in Category-1. If such opportunity was given, the petitioner could have pleaded before the concerned authority its case that it was a hospital falling in Category-1 and that even the hospital which was in the process of establishment and which fell under Category-4 was, when it starts functioning, to be run in the manner contemplated in Category-1, and was a hospital of such nature and that the conditions of free treatment did not apply to these categories. 9. We are not going into the factual question as to whether the petitioner's hospital actually fell in one category or the other, but we are only pointing out that the respondent-authority has, without considering the significance of the categorisation of hospitals and the effect of clause (iv) of Category-4 read with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lth and Family Welfare may having regard to the treatment available therein or the geographical situation thereof, or the class of patients for whom such treatment is provided either generally or in each case certify that the hospital even though it makes a charge for the said treatment, is nevertheless run on non-profit basis and is deserving of exemption from the payment of duty on the import of hospital equipment, provided that the equipment so imported is received by way of free gift from a donor abroad or purchased out of the donations received in foreign exchange. The fourth and the only other category comprises hospitals, which are in the process of being established and in respect of which the Ministry of Health and Family Welfare is of the opinion that there is an appropriate programme for establishment of the hospital, that there are sufficient funds and other resources required for such establishment and that such hospital would start functioning within a period of two years and when it starts functioning, it would be relatable to a hospital specified in Categories 1, 2 or 3 referred to hereinabove. 10. Thus, insofar as the petitioner is concerned, it was granted exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which Category- 4 relates was a hospital which was in the process of being established and for getting the benefit of exemption, it should become a hospital of the type of hospital that fall in Categories 1, 2 or 3, when it starts functioning. The idea underlying Category-4 appears to be to encourage bringing into existence of new hospitals of the nature falling in Categories 1, 2 or 3. The court held that the respondent authority has without considering the significance of categorisation of hospitals and the effect of clause (iv)) of Category-4 read with Category-1, straightaway proceeded to consider the matter in the light of the conditions which are attached to the hospitals falling in Category-2. It is in the light of the aforesaid findings recorded by it that this court had set aside the said order and directed the second respondent to consider the matter afresh. 12. It may be pertinent to note that pursuant to the aforesaid decision of this court, the second respondent issued a show-cause notice dated 7th October, 2003 on the following grounds:- - At the time of application, the hospitals desiring to avail benefits under 64/88 cus notification, were given an opportunity to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng has to relate to para 1, 2 or 3 of the table annexed to the notification. - M/s. Gujarat Methodist Church Cardio Thoracic & Vascular Research Society, Nadiad gave an undertaking on a stamp paper that the hospital when starts functioning would be relatable to a hospital falling under category 2 of the notification 64/88 thereby inter alia fulfilling: o free treatment on an average to 40%of the out door patients. o free treatment to all indoor patients whose family income is less than Rs.500/- per month and for such purpose reserve 10% of its indoor beds; o Treatment at reasonable rates to the remaining patients. The issue before the government is fulfillment of conditions prescribed under Category 2. - Categorization under category 1 is applicable to institutions as may be certified by the Ministry of Health and Family Welfare (MOHFW), to be run substantially aided by such charitable organization as may be approved, from time to time, by the said MOHFW. This hospital was neither run nor aided by any charitable organization approved by MOHFW nor certified by MOHFW to this extent. - For issuance of installation certificate, the two conditions to be fulfilled are: o That suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inked from the fulfillment of conditions chosen by the petitioner, that is, Category-2, is in flagrant defiance of the decision of this court, which is binding upon the respondents as the same has not been challenged by them and as such, has attained finality. The respondents, therefore, are bound to act in compliance with the said order and consider the case with an open mind and ascertain as to whether or not the petitioner complies with the requirements of Category-1. From the contents of the showcause notice itself, it is apparent that the second respondent has made up its mind not to abide by the order of this court which is evident from the tenor of the show-cause notice whereby the petitioner has been called upon to show cause as to why the eligibility of the institution should not be considered only under Category-2 of the Customs Notification No.64/1988 with a further observation that the institution had already been found not fulfilling the obligations set out under paragraph 2 of the table annexed to Customs Notification No.64/1988. Viewed in the light of the observations of this court in its judgment and order dated 16th July, 2003 passed in Special Civil Application No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant therein challenged the said order before the High Court of Andhra Pradesh. However, the petition came to be dismissed. The appellant carried the matter before the Supreme Court. The Supreme Court was of the opinion that merely because the appellant had claimed exemption under Category 2 of the exemption notification which was granted does not mean that the appellant could not claim exemption under Category 3. The court referring to various decisions on the issue held that even if an applicant does not claim benefit under a particular notification at the initial stage, he is not debarred, prohibited or estopped from claiming such benefit at a later stage. In the facts of the said case, the court held that the ground which weighed with the Deputy Director General (Medical), DGHS for not considering the prayer of the appellant was that earlier, exemption was sought under Category 2 of the exemption notification, not under Category 3 of the exemption notification and exemption under Category 2 was withdrawn. It was held that this is hardly a ground sustainable in law. On the contrary, the well-settled law is that in case the applicant is entitled to the benefit under two diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioning has claimed that it belongs to Category-1. Under the circumstances, when in the light of the aforesaid decision, even after exemption is granted under one of the three categories, it is permissible to change the category, it would certainly be open to the petitioner at a stage prior thereto, to claim the benefit of category-1 instead of Category-2. As held by this court in the above referred writ petition, the conditions below Category-2 are not required to be satisfied in case a hospital falls under Category-1. Under the circumstances, the second respondent while considering the application of the petitioner was required to examine as to whether or not the petitioner satisfies the requirements of category-1 so as to be entitled to the benefit thereof and only thereafter proceed to ascertain whether or not the conditions under category-2 are satisfied. 15. In the show-cause notice issued by the second respondent, one of the grounds stated is that neither the hospital run by M/s. Gujarat Methodist Church Cardio Thoracic and Vascular Research Society, Nadiad was certified by MOHFW nor M/s. Gujarat Methodist Church Cardio Thoracic and Vascular Research Society, Nadiad was app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Category No.1 so as to be entitled to issuance of an exemption certificate under the said category. 16. In the facts of the present case, a perusal of the impugned order makes it amply clear that the second respondent has decided the matter with a closed mind which is apparent from the contents of the show-cause notice as noted hereinabove. The very basis of the impugned order, that is, the show-cause notice itself is contrary to the order passed by this court in the above referred writ petition inasmuch as the same calls upon the petitioner to show cause as to why it should not be considered only under Category-2 of Customs Notification No.64/1988 despite the fact that this court had categorically held that the respondent was required to consider the case and decide as to under which category the petitioner would fall. 17. In the light of the aforesaid discussion, it is apparent that the impugned order has been passed in clear disregard of the decision of this court in the above referred writ petition. Moreover, the same is also not in consonance with the law laid down by the Supreme Court in the case of Share Medical Care vs. Union of India (supra) and as such, cannot be sustai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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