TMI Blog2017 (11) TMI 1955X X X X Extracts X X X X X X X X Extracts X X X X ..... om the patients who were admitted and fees were also received for rendering service in the hospital and no service was rendered free of charge to whomsoever. The plea that they were collecting only a nominal charge from the poor, distressed, disabled and needy persons, based on their income was not true and no evidence was produced to that effect. Further, the exemption granted under Section 80-G of the Income Tax Act, would not, by itself, entitle the petitioners - hospitals to seek an exemption from the payment of property tax. When the respondent - Corporation relies upon not only the receipt of amount from the patients, but also the rent received towards Canteen and fees collected for parking the vehicles and other sources, whether those receipts would attract rent or not, has to be decided only by the assessing authority, at the instance of objection or revision by the owner of the building, even if they are charitable hospital and dispensaries. Without that process being resorted to, it may not be proper to quash the demand notice itself, assuming the receipt of the amount, by itself, would not amount to a rent. This Court holds that the benefit conferred under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioning about the exemption granted to the petitioner Trust and the Medical College under the law. 2.7. Though the petitioner Trust and the Medical College are exempted from levying property tax, the fourth respondent issued the impugned demand notice for payment of property tax for the Assessment No. 395495 and also directed to pay a sum of ₹ 29,977/- (Rupees Twenty Nine Thousand Nine Hundred and Seventy Seven only) in respect of R.S. No. 80/1 [W.P(MD) No. 14508 of 2016]; a sum of ₹ 2,75,982/- (Rupees Two Lakhs Seventy Five Thousand Nine Hundred and Eighty Two only) in respect of R.S. No. 52/3 [W.P(MD) No. 14509 of 2016] and a sum of ₹ 25,81,130/- (Rupees Twenty Five Lakhs Eighty One Thousand One Hundred and Thirty only) [W.P(MD) No. 14510 of 2016] with effect from 01.10.2013. 2.8. Thereafter, the fourth respondent passed the impugned order dated 01.08.2016, directing the petitioner to pay the aforesaid amount towards property tax within thirty days with a default clause. 2.9. Challenging the same, W.P(MD) Nos. 14508 to 14510 of 2016 have been filed. 3. Brief facts necessary for the disposal of W.P(MD) Nos. 14517 and 14518 of 2016, are as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinciples, as the statute grants exemption from levying property tax to the hospitals and the Charitable Institutions; 4.2. The act of respondents in levying property tax to the petitioners -hospitals, is illegal and without any basis and thus, it would exhibit non-application of mind on the part of the respondents. 4.3. Reliance has also been placed upon Section 122 (e) of the Act, which grants statutory exemption to the charitable hospitals and dispensaries from levying tax and it reads as under: 122. General exemption from property tax. ***** ***** ***** ***** (e) Charitable hospitals and dispensaries, but not including residential quarters attached thereto. 4.4. The main thrust of the argument put forth by the petitioner is that the impugned notices were issued without any valid resolution passed by the Corporation Council in that regard. No property tax was levied all these years, until the impugned Demand Notice issued by the respondents. 4.5. The act of the respondent Corporation in issuing demand notice for collection of property tax from the petitioners - hospitals, would be without any jurisdiction. 4.6. Moreover, the payments made by the pati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u Ramulu and others reported in (2001) 7 Supreme Court Cases 71. (ii) Nasiruddin and others v. Sita Ram Agarwal reported in (2003) 2 Supreme Court Cases 577. (iii) Vemareddy Kumaraswamy Reddy v. State of A.P reported in (2006) 2 Supreme Court Cases 670. (iv) The Special Officer and Commissioner, Tiruchirappalli Corporation, Tiruchirappalli v. Hindu Mission Hospital reported in 2008-2-L.W.159. (v) Mohd. Shahabuddin v. State of Bihar reported in (2010) 4 Supreme Court Cases 653. (vi) The Administrator v. Government of Kerala [W.P(C) No. 6085 of 2007 (Y), decided on 20.07.2011]. (vii) Bonanzo Engg. Chemical (P) Ltd., v. CCE reported in (2012) 4 Supreme Court Cases 771. 7. Per contra, Mr. B. Pugalendhi, learned Additional Advocate General assisted by Mr. N. Shanmugaselvam as well as Mr. R. Murali, learned Standing Counsel appearing for the respondent - Corporation made the following submissions: 7.1. Velammal Hospital and Medical College was established in Velammal Village to the extent of 140 acres and the petitioner made a representation dated 05.07.2016 to the respondent - Corporation seeking exemption from payment of property tax, however, the same was rej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contentions, he placed reliance on the following decisions: (i) Indian Chamber of Commerce v. C.I.T reported in (1976) 1 Supreme Court Cases 324. (ii) Grasim Industries Ltd. v. State of M.P reported in (1999) 8 Supreme Court Cases 547. (iii) Special Officer and Commissioner, Tiruchirappalli v. Hindu Mission Hospital reported in (2008) 4 MLJ 816. (iv) Commissioner of Central Excise v. Hari Chand Shri Gopal and others reported in (2011) 1 Supreme Court Cases 236. (v) Oil and Natural Gast Corporation Limited v. Commissioner of Income Tax and another reported in (2015) 10 Supreme Court Cases 621. 9. I have considered the submissions made by the learned Counsel for the parties and perused the materials available on record. 10. The core issue involved in all these writ petitions is, whether the petitioners-hospitals are eligible to be exempted from paying the property taxes as demanded by the respondent - Corporation, or not? 11. Before analysing the issue that has arisen for consideration, it is relevant to refer to the relevant provisions of Madurai City Municipal Corporation Act, 1971 as under: Section 120: 120. Description of property tax.- (1) If the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an exemption from the payment of property tax. 15. In S.N.R. Sons Charitable Trust, Coimbatore v. Commissioner, Coimbatore City Municipal Corporation, Coimbatore reported in (1993) 10 WLR 769, the scope of exemption from the payment of property tax with reference to the building owned as buildings and lands of charitable hospitals and dispensaries not including the residential quarters attached thereto mentioned under Section 123(e) of Tiruchirappalli City Municipal Corporation Act, came up for consideration before a Division Bench of this Court and it is held that the amount paid by the patients who use the hospital as well as the range of services provided by it cannot be regarded as rent paid by them. In the narrow sense, it is only intended under the provisions referred to therein. Therefore, the benefit of exemption to the respondent hospital therein conferred under Section 123(e) of the said Act cannot be denied on that score alone. 16. In the aforesaid decision, the Division Bench placed reliance on the decision of the Honourable Supreme Court in State of Punjab v. British India Corporation Ltd., reported in AIR 1963 SC 1459 and the decision of the Delhi High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether those receipts would attract rent or not, has to be decided only by the assessing authority, at the instance of objection or revision by the owner of the building, even if they are charitable hospital and dispensaries. Without that process being resorted to, it may not be proper to quash the demand notice itself, assuming the receipt of the amount, by itself, would not amount to a rent. 21. In Municipal Corporation of Coimbatore v. Govindasamy Naidu Hospital reported in (2004) 2 CTC 155, where evidence established that many patients volunteered and paid sums of money in excess of fee charges by way of donation, a Division Bench of this Court has held that exemption granted under Income Tax Act, Customs Act could not be applied automatically in determining status under Section 86(e) of the Tamil Nadu District Municipalities Act, 1920, when the hospital did not establish that it was a charitable hospital and the profit generated by it was used for charitable purpose. 22. In the considered opinion of this Court, reliance placed on the decision in S.N.R. Sons Charitable Trust, Coimbatore v. The Commissioner, Coimbatore City Municipal Corporation, Coimbatore reported in 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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