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TMI Blog2014 (3) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... e being charged for medical services. The fact is that the details furnished in the documents produced would go to show that the appellant hospital is earning money by charging from patients and therefore the claim of the appellant that the entire area taxed is used for charitable purpose is not reflected in the documents produced - The High Court has correctly interpreted the ‘Explanation’ clause to Section 3(1) of the Act to hold that ‘charitable purpose’ means ‘relief of the poor and free medical relief’. The tax herein is on the ‘building’. The society already has income tax exemption and the question here is whether the building is used principally for ‘charitable purpose’. Only the building utilized for providing free medical aid can be said to be used principally for charitable purpose and it will go against the letter of the law to grant building tax exemption for all the buildings of the hospital irrespective of what it is used for simply on the ground that the overall object of the hospital is charity although it is being predominantly run on a chargeable basis. In this case, the building used for providing free medical aid must be exempted from paying building tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then Tehsildar, Kottayam called the representatives of the appellant to ascertain as to whether exemption is available to the appellant under the Kerala Building Tax Act, 1975 (hereinafter referred to as the Act ). A person from the office of the Tehsildar, Kottayam visited the appellant hospital and stated that the appellant is liable to pay building tax. 7. Thereafter, the appellant filed a detailed representation stating that since it is a charitable institution engaged in charitable activities, the appellant has to be exempted from paying building tax. 8. On 27.02.2004, the appellant received a demand notice purportedly issued by the Assessing Authority by which the appellant was assessed to building tax under Sections 9(2) and 9(4) of the Act wherein building tax was assessed at an amount of 24,77,700/- for a plinth area of 14826.63 Sq. meters to be paid by the appellant. 9. Aggrieved by the aforesaid orders dated 27.02.2004, the appellant filed Writ Petition(C)No. 9968 of 2004 before the High Court of Kerala. By an order dated 02.04.2004, the learned single Judge of the High Court disposed of the writ petition directing the Tehsildar to reconsider the assessment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed principally for a charitable purpose as the medical services were not rendered free of charge to all patients, but only to those who could not afford it. The rest were charged a nominal fee for services at the Hospital. The explanation to Section 3 of the Act reads as under : For the purposes of this sub-section, charitable purpose includes relief of the poor and free medical aid. The High Court, mainly relying on the Medical Trust case (supra) has held that since it has already been held by the Kerala High Court that charitable purpose means rendering medical relief free of charge as per the Explanation clause to Section 3(1)(a) of the Act, the appellant was not entitled to exemption from paying building tax as they were charging nominal charges from patients who could afford it and was giving free services to those who could not. 14. The matter is in appeal before us. The learned counsel for the appellant, Mr.Senthil Jagadeeshan has contended that the Division Bench has erred in relying upon the judgments in the Medical Trust case and the Thirurangadi Muslim Orphanage Committee case (supra) as the said judgments were rendered in the facts of those cases and no pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital, it is evident that the hospital authorities are not rendering any medical service free of cost and are making profit and is not running under no loss no profit basis as claimed. The purpose for which the building is used is the only relevant fact for determining whether the appellant is exempt from paying building tax and simply because the income derived from it is used for charitable purpose, it cannot be exempted from paying building tax. The counsel for the respondents relied on the Medical Trust case (supra) in order to show that charitable purpose means free medical relief as held in that case, and since the appellant is not providing free medical relief for all and is instead charging a nominal fee for those who can afford it, it cannot claim exemption from building tax. 16. We have heard the learned counsel for both the parties and perused the evidence on record and examined the rival legal and factual contentions. The following questions would arise for consideration : i. Whether the application of income derived from a building for charitable purpose is sufficient to hold that a building is used principally for charitable purpose as per Section 3(1)(b) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- for the years 2004-05. It is not clearly mentioned what social work and charities is. Furthermore, an exemption is provided for that area in which free medical aid is provided by the appellanthospital. The appellant has not produced cogent material evidence before the competent authority or the State government or before the High Court to show that the entire building has been used for charitable purpose by rendering free medical aid to the needy, poor people of society. The fact is that the details furnished in the documents produced would go to show that the appellant hospital is earning money by charging from patients and therefore the claim of the appellant that the entire area taxed is used for charitable purpose is not reflected in the documents produced. Hence, we are not inclined to interfere with the impugned orders. The High Court has correctly interpreted the Explanation clause to Section 3(1) of the Act to hold that charitable purpose means relief of the poor and free medical relief . 19. The tax herein is on the building . The society already has income tax exemption and the question here is whether the building is used principally for charitable purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X
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