TMI Blog2001 (6) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... imself with regard to the compliance of the parameters laid down in Notification No. 64/88. Thereafter the Secretary to Government, Health Department of the State Government recommends the case of the petitioner to the Ministry of Health, Department of Family Welfare, New Delhi. After considering the claim of the petitioner for the import of such life saving equipments and for exemption of the Customs Duty thereof, it is for the Director General of Health Services (DGHS in short) to issue the certificate exempting the payment of Customs Duty (hereinafter called the CDEC). Such certificate are to be produced before the Customs officials and the equipments will be released without the payment of Customs Duty. 3.The case of the petitioner is that the Director General of Health Services, under the impugned proceedings dated 28-1-1998 in W.P. 2110 of 1998 had kept the application of the petitioner for the issue of the Customs Duty Exemption Certificate for considerable long period and rejected the same without furnishing the particulars furnished by the petition and in some cases had cancelled the Customs Duty Exemption Certificate already issued on the ground that the requirement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Director General of Health Services respectively have filed counter affidavit stating that a public interest litigation was filed before the Delhi High Court by Peoples Union for Civil Liberty in W.P. No. 409 of 1996 alleging that the Health Department has been issuing certificates without proper verification. In the said writ petition, the Delhi High Court had passed certain orders. On 23-5-96 the Court appointed one Mr. Chandramouli to enquire into the allegation by formulating certain terms of reference. On 29-8-86 the said Mr. Chandramouli submitted a Report stating that there is prima facie reason to believe the commission of large scale illegalities at different levels in the Government with respect to the issue of CDEC. By order dated 18-10-96 the Delhi High Court has appointed two Committees, the first one is an one-man committee, comprising of Mr. S.D. Mohile, the then Member, Central Board of Excise and Customs. This Committee was to examine the steps taken with regard to the recovery of Customs Duty and to quantify the amount of Customs Duty foregone in cases where the equipments were released without production of the relevant certificate. The Second Committee, consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notification No. 64/88 with regard to the free treatment. His contention is that even though a percentage had been fixed under the said notification for providing free treatment by the petitioner's hospital, it is not the case of the respondents that the petitioners did not comply with such requirement by avoiding such fulfilment either by evasion or by refusal. When the persons who are eligible for such free treatment are not available, the petitioners cannot be found fault with from their entitlement of the Customs Duty Exemption on the ground that they have not fulfilled such condition or requirement. Even as per the terms of the notification, only provision should be made for and that has been done. Only if it can be established by the respondent that in spite of the availability of such eligible persons or patients the petitioners had refused to provide the free treatment as contemplated under the notification only then the petitioners can be said to be ineligible for such Customs Duty Exemption on the ground of non-fulfilment of the requirement of the conditions of the notification. He also further contended that the impugned order of rejection of the application and the can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icate. Any one who do not fulfil the conditions or the obligations contemplated under the said Clause, such persons are not entitled for the Customs Duty Exemption. The respondents had scrupulously followed the principles laid down by the Supreme Court and wherever Clause 2 of the Table to the said Notification 64/88 was not complied with, the certificates were cancelled or where the applications are pending, the same were rejected. It is not the case of the petitioners that they fulfilled the requirement of Clause 2 of the Table to the Notification 64/88. So far as the contention regarding the violation of principles of natural justice is concerned, he vehemently contended that in some of the cases, particulars were called for by way of proforma and the cases were decided on the basis of the particulars furnished by the petitioners. In many of the cases, the officials of the second respondent Directorate visited the hospital, gathered particulars and submitted the Report pursuant to the directions issued by the Delhi High Court through the Rosha Committee. Wherever the Report of the officials revealed the non-fulfilment of conditions of Notification 64/88, suitable orders were pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. When once the discharge of obligation specified under the said notification is a condition precedent for the grant of exemption, unless the petitioners establish that they fulfilled such conditions, they are not entitled for the exemption of Customs Duty. Hence it is necessary to consider Clause 2 of the Table to the said notification and also whether the petitioners had not complied with the same. 8.The questions for consideration are : (1) Whether the petitioners did not comply with the requirement of Clause 2 of the Table to the said Notification 64/88 Customs. (2) Whether the impugned proceeding is in violation of the principles of natural justice. (3) Whether the second respondent Directorate is entitled to rely upon the Report of their officials. (4) Whether the second respondent Directorate is correct in taking into consideration of the innocuous statement given by the petitioner hospital or their representatives to the visiting officials without knowing the implications therefor. (5) Since Notification 64/88 was rescinded by subsequent notification whether the officials can enforce the rescinded notification? 9.It is wort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , to be run or substantially aided by such charitable organisation as may be approved from time to time, by the said Ministry of Health and Family Welfare. 2. All such hospitals which may be certified by the said Ministry of Health and Family Welfare, in each case to be run for providing medical, surgical or diagnostic treatment not only without any distinction of caste, creed, race, religion or language, but also - (a) free, on an average, to at least 40 per cent of all their outdoor patients; and (b) free to all indoor patients belonging to families with an income of less than rupees five hundred per month, and keeping for this purpose at least 10 per cent of all the hospital beds reserved for such patients; and (c) at reasonable charges, either on the basis of the income of the patients concerned or otherwise, to patients other than those specified in clauses (a) and (b)." 10.In all these cases, the impugned orders were passed solely on the ground that the petitioners had not complied with the Clause 2(a) (b) of the Table to said notification. Hence we are not concerned with the other clauses of the said notification, even though the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tificate of exemption would ensure that the obligation imposed on the persons availing of the exemption notification are being duly carried out and on being satisfied that the said obligations have not been discharged they can enforce realisation of the Customs duty from them." 13.However, Mr. Habibullah Basha, the learned Senior Counsel appearing for some of the petitioners contended that the Mediwell Hospital case was overruled by a Bench of three Judges in the case of Faridabad CT. Scan Centre v. D.G. Health Services - 1997 (95) E.L.T. 161 (S.C.) = (1997) 7 SCC 752 and as such no reliance can be placed in the judgment delivered in Mediwell Hospital case. 14.The learned Senior Counsel for the respondent contended that the judgment in Mediwell Hospital case was overruled on only one aspect as to whether the diagnostic centres are entitled for the benefit of the Customs Duty Exemption Certificate. In the Mediwell Hospital case it has been held that the diagnostic centre is entitled for such Customs Duty Exemption Certificate on the basis of violation of Article 14 of the Constitution of India. That has been set aside in the later judgment in Faridabad CT. Scan Centre case. So f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile approving the import of the hospital equipment, regard should be taken that the hospital equipment in respect of which the exemption is claimed is not manufactured in India and is necessary for running or maintenance of the hospital. 19.The "hospitals" mentioned in the Table are - (i) all such hospitals as may be certified by the said Ministry of Health and Family Welfare, to be run or substantially aided by such charitable organisation as may be approved from time to time, by the said Ministry of Health and Family Welfare. (ii) all such hospitals which may be certified by the said Ministry of Health and Family Welfare, in each case, to be run for providing medical, surgical or diagnostic treatment not only without any distinction of caste, creed, race, religion or language but also on an average provide free treatment to at least 40% of all their outdoor patients and to provide free treatment to all indoor patients belonging to families with an income of less than rupees five hundred per month and keep for this purpose at least 10 per cent of all the hospital beds reserved for such patients and at reasonable charges either on the basis of the income of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... become cautious enough to conceal the defects. The Visiting Committee prepared the Report only on the basis of the particulars furnished by the management of the hospitals and hence the petitioners at this stage cannot be permitted to go back from such statement. The second respondent, Director General of Health Services had rightly placed reliance on the said Report and found that the petitioners had not complied with the necessary conditions imposed under the said Notification. 23.This Court gave its anxious consideration to the above contention. So far as the provision of free treatment for at least 40% of the outdoor patients is concerned, there is no dispute that the petitioners had conducted outdoor medical camps free of cost. The stand of the second respondent Director General of Health Services is that those camps cannot be taken into consideration for the purpose of compliance of the condition. 24.In my opinion, the stand taken by the second respondent cannot be accepted. When it is contemplated that the hospital has to provide free treatment, on an average, to at least 40% of their outdoor patients, the contemplation is that the hospital authorities should provide an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10% category reservation, even though the beds under that category are vacant. That is why the question of the refusal to provide the medical aid to those who is the criteria to be taken into consideration and the notification clearly states that provision should be made. 27.In fact the Government of Tamil Nadu had realised the difficulties in monitoring the hospitals with regard to the compliance of the conditions under Clause 2 of the Table of the Notification 64/88. Consequently the Government of Tamil Nadu issued an order in G.O. Ms. No. 999 Health dated 11-6-1990 in the following terms : "After careful examination, the Government direct the Director of Medical Education/Director of Medical Service to examine the application received from Private Medical Institutions for Customs Duty Exemption Certificate on the following conditions :- (i) Each of the Private Medical Institution, applying for Customs Duty Exemption Certificate may be attached to the nearest Government Teaching Hospitals/Government Hospital so that 10% of the inpatients whose income is less than Rs. 500/- and 40% of outpatients can be referred to by the Government Hospitals to the Private Medical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration is even an admission by any one can be explained. When that be the case, it is for the second respondent Director General of Health Services to provide an opportunity to the petitioners herein in respect of the Report submitted by the Visiting Committee. When the Report has been admittedly prepared on the basis of the materials collected in an innocuous manner and the petitioners have given the particulars without knowing the purpose for which the particulars were sought for, such statements cannot be taken into consideration in strict sense to hold that the petitioners have violated the conditions of the Notification, without affording an opportunity to the concerned persons to explain the same. In this case, it is admitted that the petitioners have not been given notice to show-cause or the copy of the Report of the Visiting Committee had been furnished to them. It is also the grievance that no opportunity was given before passing of the impugned proceedings. When that be so, on this ground also the order of the second respondent, Director General of Health Services cannot be sustained. 31.Since a batch of cases arises for consideration, it is better to deal with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Customs Duty was granted to the hospital like the petitioners and the obligation of the free treatment and reservation of bed had been imposed on the petitioners, had been rescinded by the subsequent Notification No. 99/94, dated 1-3-1994 which is as follows : Notification .. No. 99/94-Customs New Delhi, dated the 1st March, 1994 10 Phalguna, 1915 (Saka) G.S.R. (E) - In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby rescinds the following notifications of the Government of India in the Ministry of Finance in the Department of Revenue and Banking or the Department of Revenue and Insurance or the Department of Revenue, as the case may be, namely :- "171. No. 64/88 - Customs, dated the 1st March, 1988." Since several other notifications from the year 1957 to 1993 had been rescinded, it is unnecessary to extract the entire details, as they are not concerned for the cases on hand. 33.On the basis of this notification, it is contended that the Notification No. 64/88 is no longer in force and as such t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated December 29, 1977, are in express terms made with effect from January 1, 1978. They do not at all purport to have any retrospective effect and, therefore, they could not affect the operation of the earlier notifications dated May 23, 1977, until they came into force on January 1, 1978. Further, both Section 3B and Section 5(1) in express terms confer power upon the State Government to issue notifications "from time to time". Section 3B provides that "the State may, from time to time by notifications, declare " goods liable to purchase tax. Prior to January 1, 1978, the provision to sub-section (1) of Section 5 provided that "The State Government may, from time to time by notification.. fix a higher rate not exceeding thirteen per cent or any lower rate of tax.." Section 5(1) as amended with effect from January, 1978, provides that "the tax shall be levied, at such rate, not exceeding thirteen per cent as the State Government may, from time to time by notification, specify". Thus, the power of the State Government to issue notifications under these two sections is to be exercised by it "from time to time" and, therefore, the State Government can under Section 5(1) issue a no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of two steps; first, the old rule is made to cease to exist and, next, the new rule is brought into existence in its place. (See: Koteewar Vittal Kamath v. K. Rangappa Baliga Co. - (1969) 1 SCC 255; (1969) 3 SCR 40 SCR at p. 48). In other words, the substitution of a provision results in repeal of the earlier provision and its replacement by the new provision. As regards repeal of a statute the law is thus stated in Sutherland on Statutory Construction: "The effect of the repeal of a statue where neither a saving clause nor a general saving statute exists to prescribe the governing rule for the effect of the repeal, is to destroy the effectiveness of the repealed Act in future and to divest the right to proceed under the statute, which, except as to proceedings past and closed, is considered as if it had never existed." (Col. I, para 2042, pp. 522-523) 37.From the above principles laid down by the Apex Court, it is clear that the result of repeal of a statute, the statute as repealed ceased to exist with effect from the date of such repeal. But at the same time the repeal does not affect the previous operation of the law which has been repealed during the period it was op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ablish that the petitioners had violated the conditions imposed under Notification No. 64/88 subsequent to their availing the benefit of the exemption of Duty and before the end of February, 1994, since Notification 99/94, rescinding the Notification 64/88 came into force on 1-3-94. 44.From the counter affidavit filed by the respondents, it is clear that only in 1996 steps were taken to verify and statements were obtained from the petitioners. It is not clear as to whether the respondents had collected the materials only in respect of the relevant period during which the Notification 64/88 was in force and whether the petitioners had failed to discharge their obligation during that period. On this ground, the impugned orders are liable to be quashed. 45.However, Mr. V.T. Gopalan contended that in Mediwell Hospital case [1997 (89) E.L.T. 425 (S.C.) = (1997) 2 SCC 759] the Apex Court has held that the discharge of the obligation is continuous one. Even though the Supreme Court in Faridabad CT. Scan Centre case (1997) 7 SCC 752 overruled the decision in Mediwel Hospital case (1997) 1 SCC 759 on the question whether a diagnostic centre is entitled for the exemption of duty or not, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Faridabad CT. Scan Centre - [1997 (95) E.L.T. 161 (S.C.) = (1997) 7 SCC 752]. So far as the discharge of obligation is concerned, it has been held that it is a continuous obligation. But, however, the question of rescinding the Notification No. 64/88 and the consequences thereon was not considered by the Apex Court, as that issue was not raised. 50.Neither before the Apex Court nor before any other court, the question of rescinding of the notification had been raised and discussed. When the rescinding of the notification makes the said notification non-existent, it is a vital question to decide the rights and liabilities of the parties. Hence this Court had discussed this question, as supra and found that the liabilities arising out of the rescinded Notification 64/88 can be enforced only for the period during which the said notification was in existence. Hence it is for the authorities to establish that the petitioners had violated the obligation only during that period. If that is established, only then it is open to the authorities to proceed further. 51.Before parting with the case, it is worthwhile to mention that after the rescinding of the Notification 64/88 under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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