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Issues Involved:
1. Eligibility for property tax exemption under Section 86(e) of the Tamil Nadu District Municipalities Act, 1920, and Section 123(e) of the Coimbatore City Municipal Corporation Act, 1981. 2. Validity of the cancellation of the tax exemption resolution. 3. Whether the plaintiff hospital qualifies as a charitable institution. 4. Relevance of tax exemptions under the Income Tax Act and Customs Act for property tax exemption. 5. Adherence to the principles of natural justice in the cancellation process. Issue-wise Detailed Analysis: 1. Eligibility for Property Tax Exemption: The primary issue was whether the plaintiff hospital qualifies for property tax exemption under Section 86(e) of the Tamil Nadu District Municipalities Act, 1920, and Section 123(e) of the Coimbatore City Municipal Corporation Act, 1981. The plaintiff claimed exemption as a charitable hospital, but the defendant argued that the hospital collected rents and fees, disqualifying it from being considered charitable. The court scrutinized evidence, including Exhibit A-12, which revealed that detailed records of free or concessional treatments were not maintained initially. It was found that only a small percentage of patients received free or concessional treatment, and the hospital collected substantial fees and rents, contradicting its claim of being a charitable institution. 2. Validity of Cancellation of Tax Exemption Resolution: The plaintiff argued that the cancellation of the tax exemption resolution was done for mala fide and extraneous reasons without providing an opportunity for a hearing, violating natural justice principles. However, the court found no evidence of mala fide intent or extraneous reasons behind the cancellation. The court noted that the plaintiff did not seek to set aside the cancellation resolution in the suit, and the municipal authority had the power to withdraw the exemption if the hospital did not meet the criteria for a charitable hospital. 3. Qualification as a Charitable Institution: The court examined whether the plaintiff hospital qualified as a charitable institution. It considered the evidence, including the trust deed and financial records. The court noted that the hospital collected significant fees and rents, and only a small percentage of patients received free treatment. The trial and appellate courts had overlooked critical evidence, including the oral testimony of P.W.1 and exhibits A-12 and A-13, which indicated that the hospital did not provide free treatment to even 10% of the patients. Consequently, the court concluded that the hospital did not meet the criteria for a charitable institution under the relevant municipal acts. 4. Relevance of Tax Exemptions under Income Tax and Customs Acts: The plaintiff argued that the hospital's recognition as a charitable institution under the Income Tax Act and its exemption from customs duty should support its claim for property tax exemption. However, the court distinguished between the provisions of the Income Tax Act and the municipal acts. It noted that the scope of charitable purposes under the Income Tax Act was broader, including the advancement of any object of general public utility, which was not the case under the municipal acts. The court emphasized that the criteria for property tax exemption were specific to the municipal acts and could not be equated with the provisions of the Income Tax and Customs Acts. 5. Adherence to Principles of Natural Justice: The plaintiff contended that the cancellation of the tax exemption without a hearing violated the principles of natural justice. The court acknowledged the importance of natural justice but found that the plaintiff had not established any mala fide intent or extraneous reasons behind the cancellation. The court also noted that the municipal authority had the power to withdraw the exemption if the hospital did not meet the criteria for a charitable institution. Therefore, the court found no violation of natural justice principles in the cancellation process. Conclusion: The court concluded that the plaintiff hospital did not qualify as a charitable institution under Section 86(e) of the Tamil Nadu District Municipalities Act, 1920, and Section 123(e) of the Coimbatore City Municipal Corporation Act, 1981. The trial and appellate courts had overlooked critical evidence indicating that the hospital collected significant fees and rents and did not provide free treatment to a substantial percentage of patients. The court also found no evidence of mala fide intent or extraneous reasons behind the cancellation of the tax exemption resolution. Consequently, the court set aside the judgments and decrees of the trial and appellate courts, dismissing the suit filed by the plaintiff hospital. The Letter Patent Appeal was allowed, with no order as to costs.
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