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TMI Blog2012 (10) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... his court had set aside the said order and directed the second respondent to consider the matter afresh, while holding that that if hospitals fall in Category-1, the conditions which are attached to the hospitals falling in Category-2 are not attracted. This is not a case where the petitioner was granted exemption under Category-2 and upon withdrawal of the same is claiming benefit under Category-1. Even after exemption is granted under one of the three categories, it is permissible to change the category, it would certainly be open to the petitioner at a stage prior thereto, to claim the benefit of category-1 instead of Category-2. A perusal of the impugned order makes it amply clear that the second respondent has decided the matter with a closed mind. The very basis of the impugned order, that is, the show-cause notice itself is contrary to the order passed by this court in the above referred writ petition inasmuch as the same calls upon the petitioner to show cause as to why it should not be considered only under Category-2 of Customs Notification No.64/1988 despite the fact that this court had categorically held that the respondent was required to consider the case and deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of duty in accordance with the exemption granted under Customs Notification No.64/1988 dated 1st March, 1988. Though the date of arrival of the subject equipment at Bombay Port was 9th September, 1993, it was cleared and brought to Nadiad much later. On account of non-receipt of structural plans necessary for installation from Bombay and Germany, there was a delay in setting up the equipment. There was further delay in setting up peripheral facilities like air-conditioning, electrical fittings etc. and the delay by the Company itself, that is, three months for carrying out its actual installation, the subject equipment became operational on 28th March, 1996. It is the case of the petitioner that insofar as the hospital was concerned, the Out Patient Department was started on a limited basis in January, 1995 and was extended since April, 1995 and the hospital started functioning on full-fledged basis from January, 1997. 3. On 22nd January, 1998, the Assistant Commissioner, Ahmedabad effected seizure of the subject equipment without any intimation whatsoever. The petitioner was, therefore, constrained to move a writ petition before this court being Special Civil Application No.1181 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecommended the grant of installation certificate to the petitioner by its letter dated 21st July, 1998. The petitioner has thereafter continued to operate the subject equipment. It is the case of the petitioner that the hospital has been organising regular medical camps wherein it is providing free medical facilities. The details regarding the number of camps organized as well as the number of patients provided treatment therein in the last five years, have been set out in a table which has been annexed alongwith the petition. The hospital has undertaken 1200 open heart surgeries, 2400 angiography, 300 Balloon Pulmonary Valvuloplasty and 90 permanent Pacemakers up to April, 2004 and maintains scrupulous records which can be easily verified by the authorities. 4. By a letter dated 25th January, 1999, the second respondent rejected the application for issuance of Installation Certificate and simultaneously withdrew the Customs Duty Exemption Certificate issued for the subject equipment with effect from the date of issuance thereof, that is, 8th March, 1994. The petitioner challenged the said letter dated 25th January, 1999 by filing a writ petition before this court being Special C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssuance of the certificate. Apprehending that on the basis of the cancellation certificate, the third respondent was proceeding to adjudicate the show-cause notice dated 19th February, 1998 and confirm the demand raised therein without further notice to the petitioner, the petitioner has filed the present writ petition under Articles 226 and 227 of the Constitution of India, challenging the order dated 26th March, 2004 passed by the second respondent as well as seeking a direction to the said respondent to grant a certificate to the effect that the subject equipment has been installed in the hospital and that such hospital has started functioning and to categorise the petitioner under category 1 of the Customs Notification No.64 of 1988 dated 1st March, 1988. 5. In response to the averments made in the petition, an affidavit dated 1st October, 2004 has been made by one Dr. Jai Karan, son of Shri Ram Baran. However, in the entire affidavit, the designation of the said person is not stated nor is it anywhere stated as to on behalf of which respondent, the affidavit-in-reply has been filed. 6. Mr. Mitul Shelat, learned advocate appearing on behalf of the petitioner invited the att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the respondent authority had without considering the significance of the categorisation of hospitals and the effect of clause (iv) of Category-4 read with Category-1 straightaway proceeded to consider the matter in light of the conditions which were attached to the hospitals falling in Category-2. The court accordingly held that the impugned order is passed without proper application of mind to the contents of the exemption notification and quashed the said order with a direction to the second respondent to reconsider the application of the petitioner for issuance of installation certificate and to take appropriate decision thereon. It was emphatically argued that despite the specific findings of the court, the said authority has, in complete disregard of the same, proceeded to pass the impugned order on the very same ground. 6.1 Inviting attention to the impugned order, it was pointed out that the petitioner's application came to be rejected on the ground that the petitioner did not fulfill the condition prescribed in Category-2 and that the equipment was installed and made functional only on 28th March, 1998 four years after issuance of CDEC whereas it should have install ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e free services to at least 40% of its outdoor patients and that it has failed to provide 10% beds for indoor patients of specified low income, but the duty is not demandable on the equipment in question inasmuch as the said conditions are applicable to the hospitals falling within Category-2 whereas the case of the petitioner is likely to be covered under Category-1 of the table. It was urged that in the light of the fact that the case of the petitioner is initiated under Category-4 of the table, the concerned Ministry has yet to decide that out of the three categories, under which category, the hospital would fall. 6.3 The learned counsel further invited the attention of the court to the show-cause notice issued by the second respondent and more particularly the last ground stated therein namely, that as per the records, neither the hospital run by M/s. Gujarat Methodist Church Cardio Thoracic and Vascular Research Society, Nadiad was certified by MOHFW nor M/s. Gujarat Methodist Church Cardio Thoracic and Vascular Research Society, Nadiad was approved as a charitable organisation by MOHFW to run such hospitals at that point of time. It was submitted that if at the relevant poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s an order or give directions which the government or the public authority should have passed or given had it properly and lawfully exercised its discretion. It was, accordingly, urged that this court may pass appropriate orders which otherwise ought to have been passed by the Government or the concerned public authority. 7. Opposing the petition, Mrs. Vasavdutta Bhatt, learned standing counsel for the respondents placed reliance upon the averment made in the affidavit-in-reply filed on behalf of the respondents. It was submitted that the issue before the Government is regarding fulfilment of the conditions prescribed under Category-2. According to the learned counsel categorisation under Category-1 is applicable to institutions as may be certified by the Ministry of Health and Family Welfare to be run substantially aided by such charitable organisation as may be approved from time to time by the said Ministry, whereas, the petitioner hospital was neither run nor aided by any charitable organisation approved by the Ministry nor was it certified by the Ministry to this extent. It was argued that for issuance of installation certificate, the following two conditions are required to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms Notification No.64/1988 and that categorisation under Category-1 is applicable to institutions as may be certified by the Ministry of Health and Family Welfare to be run substantially aided by such charitable organisation as may be approved, which condition is not satisfied by the petitioner institution. Insofar as the question of installation certificate is concerned, the learned advocate submitted that the equipment for which CDEC was issued was installed and made functional only on 28th March, 1998, that is, after four years of issuance of the CDEC, whereas it should have been installed and started fulfilling the conditions under Category-2 within two years' time as per the terms and conditions of the Notification No.64/1988. It was, accordingly, urged that the impugned order passed by the second respondent is just, proper and legal and does not warrant interference by this court. 8. From the facts noted hereinabove, it is apparent that the petitioner had sought exemption from payment of customs duty in respect of Cardiac Catherisation Laboratory from Siemens, Germany imported by it for the purposes of its hospital. Pursuant to the said application, the second respondent ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 or 3 of the Table. In other words, it was open for the petitioner to show that when the hospital which was in the process of being established would when it starts functioning become a hospital run or substantially aided by a charitable organisation. The notification shows that if the hospitals fall in Category-1 of hospitals named in the Table, the conditions which were attached to the hospitals falling in Category-2 were not attracted. In other words, if it was specified by the agency that hospital was run or substantially aided by a charitable organisation as may be approved from time to time by the Ministry, then to such hospital, the requirement of free treatment envisaged in Clauses (a) and (b) of the Table did not apply, because, no condition is attached to the hospitals which are mentioned in Category-1 of the Table. A hospital falling in Category-4 was required to satisfy the conditions mentioned therein which included the condition to the effect that when it starts functioning it would be relatable to meaning thereby that it will be of the nature or a hospital specified in paragraphs 1, 2 or 3 of the Table. In other words, if the hospital which is in the process of bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply to these categories. 9. We are not going into the factual question as to whether the petitioner's hospital actually fell in one category or the other, but we are only pointing out that the respondent-authority has, without considering the significance of the categorisation of hospitals and the effect of clause (iv) of Category-4 read with Category-1, straightaway proceeded to consider the matter in light of the conditions which were attached to the hospitals falling in Category-2. The impugned order is, in our opinion, passed without proper application of mind to the contents of the exemption notification and has been made without giving any opportunity of being heard to the petitioner against the denial of the installation certificate which had a nexus only with the installation of the equipment and the running of the hospital, and against withdrawal of the Duty Exemption Certificate, rendering it illegal and void. Pursuant thereto, the second respondent issued a show-cause notice dated 7th October, 2003 calling upon the petitioner to show cause as to why the eligibility of the institution could not be considered only under Category-2 of the Customs Notification No.6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there are sufficient funds and other resources required for such establishment and that such hospital would start functioning within a period of two years and when it starts functioning, it would be relatable to a hospital specified in Categories 1, 2 or 3 referred to hereinabove. 10. Thus, insofar as the petitioner is concerned, it was granted exemption under the fourth category and as such, upon starting functioning, it was required to be relatable to a hospital specified in Category 1, 2 or 3. 11. As noted hereinabove, initially when the petitioner had filed an application for being placed in Category-1 of the table appended to the Notification No.64/1988, the second respondent had rejected the same on the ground that in the undertaking submitted by the petitioner it had chosen Category-2 and hence, the conditions applicable to Category-2 were applicable to the petitioner, which were not satisfied and had, accordingly, rejected the application. In the writ petition filed by the petitioner challenging the said order, this court by its judgment and order dated 16th July, 2003 has categorically held that the above referred notification shows that if hospitals fall in Category-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent to consider the matter afresh. 12. It may be pertinent to note that pursuant to the aforesaid decision of this court, the second respondent issued a show-cause notice dated 7th October, 2003 on the following grounds:- - At the time of application, the hospitals desiring to avail benefits under 64/88 cus notification, were given an opportunity to identify itself with one of the categories listed in para 1, 2, 3 of the table annexed to the notification. - The institution gave an undertaking certifying that the hospital when starts functioning will be relatable to a hospital covered under category 2 under custom notification 64/88 cus. - The State Govt certified that the hospital would fulfill the conditions stipulated under the chosen category. - For category 4 institutions, certification for installation implies that the equipment has been installed, the hospital has started functioning and relatable to one of the categories specified in the table annexed to the notification. - The issue of installation certificate cannot be delinked from the fulfillment of the conditions chosen by the applicant that is category 2. - Categorisation under category 1 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied by the Ministry of Health and Family Welfare (MOHFW), to be run substantially aided by such charitable organization as may be approved, from time to time, by the said MOHFW. This hospital was neither run nor aided by any charitable organization approved by MOHFW nor certified by MOHFW to this extent. - For issuance of installation certificate, the two conditions to be fulfilled are: o That such hospital equipment has been installed in the hospital; and o That such hospital has started functioning; - Being a category 4 institution, when starts functioning, it had to relate to category 2, as per the undertaking given by the institution. Hence, the issuance of installation certificate is linked to fulfillment of conditions under category 2. - The statistics given by the hospital at the time of personal hearing on fulfillment of conditions is for a limited period and not supported by any documentary evidence/records and is not certified by the State Government. - On the contrary, the letter No.CUS-1098-350(C)/B dated 25.3.98 issued by the Deputy Secretary had annexed the free treatment certified by the CMO cum Civil Surgeon, Nadiad according to which the free OP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the institution should not be considered only under Category-2 of the Customs Notification No.64/1988 with a further observation that the institution had already been found not fulfilling the obligations set out under paragraph 2 of the table annexed to Customs Notification No.64/1988. Viewed in the light of the observations of this court in its judgment and order dated 16th July, 2003 passed in Special Civil Application No.1192 of 1999, it is apparent that the respondent has issued the show-cause notice as well as passed the impugned order in flagrant disobedience of the order passed by this court, whereby, though the show-cause notice is purportedly issued pursuant to the said order, the contents of the show-cause notice and the findings arrived at by the authority are in complete disregard of the findings recorded therein. If the respondents were aggrieved by the aforesaid judgment and order passed by this court, it was open for them to challenge the same. But once having accepted the said order, they are bound to abide by the same and cannot in purported compliance of the said judgment ignore what is held therein. Under the circumstances, the impugned order not being in cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor General (Medical), DGHS for not considering the prayer of the appellant was that earlier, exemption was sought under Category 2 of the exemption notification, not under Category 3 of the exemption notification and exemption under Category 2 was withdrawn. It was held that this is hardly a ground sustainable in law. On the contrary, the well-settled law is that in case the applicant is entitled to the benefit under two different notifications, or under two different heads, he could claim more benefit and it is the duty of the authorities to grant such benefits if the applicant is otherwise entitled to such benefit. Therefore, non-consideration on the part of the Deputy Director General (Medical), DGHS to the prayer of the appellant in claiming exemption under Category 3 of the Notification is illegal and improper. It was held that the prayer ought to have been considered and decided on merits. Grant of exemption under Category 2 of the Notification or withdrawal of the said benefit cannot come in the way of the applicant in claiming exemption under category 3 if the conditions laid down thereunder have been fulfilled. Before the Supreme Court, strong reliance had been placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of and only thereafter proceed to ascertain whether or not the conditions under category-2 are satisfied. 15. In the show-cause notice issued by the second respondent, one of the grounds stated is that neither the hospital run by M/s. Gujarat Methodist Church Cardio Thoracic and Vascular Research Society, Nadiad was certified by MOHFW nor M/s. Gujarat Methodist Church Cardio Thoracic and Vascular Research Society, Nadiad was approved as a charitable organisation by MOHFW to run such hospitals at that point of time. In this regard, there is considerable force in the submission advanced by the learned advocate for the petitioner namely that if such certificate was available at the relevant time, the petitioner would not fall under category 4 but would have been certified as falling under Category-1. A perusal of the conditions stipulated below Category-4 indicate that one of the conditions therein is that such hospital would be in a position to start functioning within a period of two years and that such hospital when starts functioning would be relatable to a hospital specified in paragraphs 1, 2 or 3 of the table. Thus, at the time when the exemption is granted under Category-4, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se and decide as to under which category the petitioner would fall. 17. In the light of the aforesaid discussion, it is apparent that the impugned order has been passed in clear disregard of the decision of this court in the above referred writ petition. Moreover, the same is also not in consonance with the law laid down by the Supreme Court in the case of Share Medical Care vs. Union of India (supra) and as such, cannot be sustained. The decision of the Supreme Court in the case of Mediwell Hospital and Health Care (P) Ltd. vs. Union of India and others (supra) would not be applicable to the facts of the present case as held by the Supreme Court in the case of Share Medical Care (supra). 18. On behalf of the petitioner, reliance has been placed on the decision of the Supreme Court in the case of Comptroller and Auditor General of India vs. K.S. Jagannathan (supra) for contending that the High Court can in the exercise of its jurisdiction under Article 226 issue a writ of mandamus or a writ in the nature of mandamus or pass orders and give directions to compel the performance in a proper and lawful manner of the discretion conferred upon the Government or public authority and i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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