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TMI Blog2021 (10) TMI 1356X X X X Extracts X X X X X X X X Extracts X X X X ..... itution that was founded by Late Dr. Ida Scudder in or around late 1800. The daughter of an American Missionary, Dr. Scudder was moved by the death of three young women during child birth. She trained in medicine in America, graduated as the first woman doctor from Cornell University and returned to India in 1900 to put to work her training in Obstetrics and Gynaecology. CMC started as a one bed clinic and realizing the need for trained assistants to support her in the field of health care, the College was started almost simultaneously. 3. The hospital states that it provides free treatment to 40% of its out-patients and 10% of its in-patients and the fee fixation criteria is on the basis of economic viability of the patients and their families. There is no Government aid or grant that is extended for the hospital. 4. Likewise, the College, run as an unaided minority educational institution, does not collect capitation fee and is a prestigious and premier teaching institution in the Country. The fee charged in the college is stated to be subsidized and it is the income generated by the Hospital that funds the subsidized medical education that the college provides. The tuition fee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... block occupied by the Resident Doctor and the Nursing Sister, the Government consider that, as they are occupied by the Doctor and the Nursing Sister, although the occupation may be for the sake of the patients, they are liable to the taxed under the explanation to sub-section (1) of section 83 of the Madras Municipalities Act, 1920, as residential buildings. (By order of the Government, Ministry of Local Self Govt.) (Sd.) R. Conran Smith Secretary to Government 7. The aforesaid G.O. has taken note of the position that the hospital answers to the description of a 'charitable hospital' insofar as it is, primarily, engaged in charitable work. Moreover and importantly, it also recognises that fees were being collected from those who were in a position to pay, but that such collection would not militate against the classification of the institution as charitable. Areas not used for charitable activities per se, such as the Administrative Block of the Hospital were excluded from the purview of the exemption granted. 8. The exemption was reiterated under a Memorandum issued by the Rural Development and Local Administration Department bearing No. 110820-F1/61-12 dated 18.02. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 123(e) of the Act, during the pendency of which, demands came to be raised and reiterated time and again, repeatedly. Final Notice dated 06.05.2018 came to be issued by R4 calling upon the petitioner to participate in a group discussion on the question of property tax demands. The petitioner duly appeared through their representatives. 15. Some objections are raised by the petitioner herein to the procedure followed in the disposal of the representation. They would state that the question of grant of exemption and assessment of property tax cannot be the subject matter of a group discussion, wherein several property owners and assessees would be present and the concept of a group discussion is unknown in such a context. 16. Though it is appropriate that hearing be conducted, particularly when the claim is for exemption, in a personalized manner wherein, the specific property owner is heard and deliberations are conducted between the officials and the assessee/its representatives alone, there is nothing singularly untoward in holding a group discussion, if the officials concerned are in a position to segregate the submissions and deal with the same precisely and in detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tution might have been started with laudable objects, they allege that over a period of time, it has come to charge its patients heavily and is also collecting fee for the various courses conducted in the college. 22. The G.O. passed in 1933 was under the Madras District Municipalities Act, 1920 and has no relevance to the present case. The respondents also point out that pursuant to an amendment to the Act in 1994, educational institutions that were earlier exempted from payment of tax were now statutorily required to remit property taxes in respect of their properties. 23. That apart, there is an alternate remedy that is available and the petitioner ought to have filed an appeal before the Chairman, Taxation Tribunal, Vellore City Corporation and ought not to have approached this Court. The arrears are huge and there is no basis whatsoever for the claim for exemption. 24. Per contra, the petitioner reiterates that its predominant object and engagement is charity and 40% of its out-patients and 10% of its in-patients are treated gratis. Only the remaining pay for the treatment received and the fees charged are commensurate and in keeping with the services rendered. 25. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted wholly or in part by voluntary contributions, (and) applies its profits, if any, or other income in promoting its objectives and does not pay any dividend or bonus to its members'. The Madras enactment does not employ the same phrase and extends the exemption to all 'charitable hospitals and dispensaries but not including residential quarters attached thereto'. However, the use of the word 'charitable' would necessitate an examination of established parameters such as the following, among other tests: (i) the activity engaged in by the entity in question (ii) whether such activity is generally understood to fall within the ambit of public service and social good (iii) whether other statutory authorities, including income-tax have recognised the petitioner as being engaged in, and rendering charitable activities (iv) whether the dominant object of the institution is to render service or to earn profit (v) if the activity does generate profit or the institution earns income from other sources, is such profit/net income ploughed back into the institution or diverted to other avenues/individuals. 35. Prosperity is not the preserve of a commercial institution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lined to intervene under Article 226, in this case, I believe that such intervention is justified. It is not in dispute that the hospital has been granted the benefit of exemption continuously from 1933. It is also not in dispute that the CHAD is part of the hospital and is engaged in charity and medical relief, both in the hospital and, as an extension to the neighbouring committees as well. In the aforesaid facts and circumstances, I see no justification whatsoever to exclude the CHAD from the ambit of exemption from property tax and quash that portion of the impugned order denying such relief. 35. Coming to the claim of exemption qua the buildings comprised in the educational institution, the Statute as it stands post amendment in 1994 militates against such claim, amendment, Section 123(c), reads as follows, the portion in brackets having been deleted as a result of the amendment: 123. General exemption from property tax:- The following buildings and lands shall be exempt from the property tax-- (a) ................ (b) ........ (c) (Buildings used for educational purpose including hostels attached thereto and places used for the charitable purpose) 36. The amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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