2021 (4) TMI 1336 - HC - Indian Laws

Seeking exemption from payment of property tax - Charitable Hospital - seeking allotment of lands, for the purpose of setting up of hospital offering free / concessional medical services - HELD THAT - The General meaning for the word Charity is generosity and helpfulness, especially towards the needy or suffering. An institution engaged in relief of the poor, charitable organization is dedicated to the General Public purpose, more specifically, for the benefit of needy people, who cannot pay for benefits received. The charitable institution does not distribute earnings for the benefit of private individuals. Thus, the character of a Charitable institution must be considered with reference to the facts and circumstances as well as the manner, in which, such institutions are being run by such trust or person. In the present case, the learned counsel for the petitioner made a submission that a holistic approach is required. Equally such a holistic approach is imminent for Revenue also. Thus, the holistic approach towards the institution alone would result in neutralizing the provisions of the Act more specifically, regarding property tax. The exemptions are exceptions and to be granted discreetly, if the applicant is capable of establishing that they are providing medical services dominantly to the poor, needy and deserving people of the society. This Court is of the strong opinion that it is for the charitable institution to establish the facts and circumstances. In the present case, the petitioners have provided some data, showing that they are providing medical services to the poor, needy and deserving people. On perusal of the official website of the petitioner/Sundaram Medical Foundation, the same would reveal that Sundaram Medical Foundation was established in 1990 by Dr.S.Rangarajan with the help of M/s.Sundaram Finance Group of Companies as a Community Centred Hospital, following the best tradition of medical service. Dr.Rangarajan's vision was to provide Quality Health Care which is cost-effective and community centred - Based on the inspection, the Corporation Officials formed an opinion that the petitioner/Sundaram Medical Foundation is not doing charitable services so as to grant exemption from payment of property tax. Thus, irrespective of the fact whether the petitioner is accepting the rates for hospital wards at Sundaram Medical Foundation published by www.medifee.com is correct or incorrect, the very facts regarding the inspection conducted by the Corporation Officials and their findings would show that there is no free access to the poor, needy and deserving patients in the petitioner/Hospital and the charges collected are also competitive and on higher side - it cannot be construed as if the petitioner is providing medical treatment at free of cost to the large number of poor, needy and deserving patients. There is a clear indication that the medical services is to be provided largely and predominantly to poor, needy and deserving people alone. When such a character is missing, then the writ petitioner Foundation is not entitled to get exemption. During the inspection, it is found that the petitioner is providing treatment to rich and affluent, but certainly not at concessional rate - the petitioner is not entitled to avail the benefit of property tax exemption under Section 101(e) of the Chennai City Municipal Corporation Act. Petition dismissed.

Summary

Issues Involved:
1. Entitlement to exemption from property tax under Section 101(e) of the Chennai City Municipal Corporation Act, 1919.
2. Compliance with the terms and conditions stipulated in the Government Order for land allotment.
3. Nature and extent of charitable activities conducted by the petitioner.
4. Validity of the respondents' rejection of the exemption application.

Issue-wise Detailed Analysis:

1. Entitlement to Exemption from Property Tax:
The petitioner, Sundaram Medical Foundation, claimed exemption from property tax under Section 101(e) of the Chennai City Municipal Corporation Act, 1919, which pertains to "Charitable hospitals and dispensaries but not including residential quarters attached thereto." The petitioner argued that as a charitable hospital, they are entitled to this exemption. The court examined whether the petitioner met the criteria for a charitable hospital, considering the nature of services provided, the extent of free treatment offered, and the charges levied on patients.

2. Compliance with Government Order Terms:
The petitioner was allotted land by the Government of Tamil Nadu under G.O.Ms.No.460, Revenue, dated 10.04.1992, with the condition to provide free treatment to 30% of outpatients and reserve 15% of total beds for poor families. The respondents argued that the petitioner did not comply with these conditions. The court noted that the petitioner provided only 15% free medical treatment, which was insufficient to meet the stipulated conditions.

3. Nature and Extent of Charitable Activities:
The court scrutinized the petitioner's claim of being a charitable hospital. The Deed of Declaration of Trust indicated that medical services were to be provided either free of cost or at concessional rates. However, the court found that the petitioner charged substantial fees for services, comparable to private hospitals, and provided limited free treatment. The court emphasized that a charitable hospital must predominantly serve the poor, needy, and deserving patients, which the petitioner failed to demonstrate convincingly.

4. Validity of Respondents' Rejection:
The respondents rejected the petitioner's application for exemption, stating that the petitioner failed to provide adequate evidence of their charitable activities and did not comply with the conditions of the Government Order. The court upheld the respondents' decision, noting that the petitioner did not establish that they were predominantly providing free medical services to the poor and needy. The court emphasized that exemptions are exceptions and must be granted strictly in accordance with statutory provisions and established facts.

Conclusion:
The court dismissed the writ petitions, concluding that the petitioner did not qualify for the property tax exemption under Section 101(e) of the Chennai City Municipal Corporation Act, 1919. The petitioner failed to demonstrate substantial compliance with the conditions of the Government Order and did not provide sufficient evidence of their charitable activities. Consequently, the petitioner was also not entitled to exemption from water and sewerage tax and charges.