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TMI Blog2021 (10) TMI 1356X X X X Extracts X X X X X X X X Extracts X X X X ..... lf be in a need of charity, and cannot hope to do charity. Though the grant of exemption is one that should be considered by the original authority and not a question in which the Court would be inclined to intervene under Article 226, in this case, it is believed that such intervention is justified. It is not in dispute that the hospital has been granted the benefit of exemption continuously from 1933. It is also not in dispute that the CHAD is part of the hospital and is engaged in charity and medical relief, both in the hospital and, as an extension to the neighbouring committees as well - there are no justification whatsoever to exclude the CHAD from the ambit of exemption from property tax and quash that portion of the impugned order denying such relief. Claim of exemption qua the buildings comprised in the educational institution - HELD THAT:- The amendment does overlook the charitable nature of the activity undertaken by a teaching college. It perhaps was intended to address prosperous educational institutions run on profit motive. A teaching institution, by definition, focuses on the dispensation of education in the arena of medicine, both subjects constituting publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aided minority educational institution, does not collect capitation fee and is a prestigious and premier teaching institution in the Country. The fee charged in the college is stated to be subsidized and it is the income generated by the Hospital that funds the subsidized medical education that the college provides. The tuition fee charged per student per year, the affidavit states, is a sum of Rs. 3,000/- for Undergraduate course and Rs. 450/- for the Postgraduate course. 5. The above history of the institution as narrated above would become relevant in the context of some of the arguments put forth by the petitioner in support of its claim for exemption towards property tax in terms of Coimbatore City Municipal Corporation Act, 1981 (in short 'Act'). 6. The inherent merit of the institution was recognized as early as in 1933 in response to a request by it for exemption from property tax levied by the Vellore Municipal Council, R. Conran Smith, the then Secretary to Government issued G.O. No. Ms.2270 L M Local Self Government Department dated 09.06.1933 accepting the request for exemption. The Government Order (G.O.) is telling in its recognition of the services of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the institution as charitable. Areas not used for charitable activities per se, such as the Administrative Block of the Hospital were excluded from the purview of the exemption granted. 8. The exemption was reiterated under a Memorandum issued by the Rural Development and Local Administration Department bearing No. 110820-F1/61-12 dated 18.02.1963. It appears that in respect of the exemption granted earlier, a demand of property tax was made and the Government directed withdrawal of the demand citing the exemption granted. 9. While this is so, demands came to be raised for the Community Health and Development Department (CHAD) as well as other educational buildings in the college campus, that are, according to the petitioner, part of the institution. CHAD, is a mobile unit and is stated to be engaged in carrying health care to the villagers and administering medical treatment to deserving cases in far-flung areas. CHAD is thus, an intrinsic part of the institution carrying and extends its good work to outside locations as well. 10. The petitioner was in correspondence with the respondents, pointing out that the institution had been granted an exemption from property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for exemption, in a personalized manner wherein, the specific property owner is heard and deliberations are conducted between the officials and the assessee/its representatives alone, there is nothing singularly untoward in holding a group discussion, if the officials concerned are in a position to segregate the submissions and deal with the same precisely and in detail. Thus, as far as the procedure is itself concerned, in relation to the holding of a group discussion, this, would not, in my view and by itself, vitiate the impugned order. 17. Ultimately, the impugned order has come to be passed on 09.11.2020 reiterating the demand raised earlier and relating to a period of 10 years from 2011-12 to 2020-2021. The impugned communication styled as 'Final Demand' proceeds on the basis that the petitioner had, in fact, acquiesced to the demands and the petitioner would seriously and strenuously contest this position. The sum and substance of the rejection is that the petitioner collects charges in some case, exorbitant charges, from its patients, and as such, cannot be called a charitable institution. 18. The grant of exemption has to be seen strictly in line with the lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrears are huge and there is no basis whatsoever for the claim for exemption. 24. Per contra, the petitioner reiterates that its predominant object and engagement is charity and 40% of its out-patients and 10% of its in-patients are treated gratis. Only the remaining pay for the treatment received and the fees charged are commensurate and in keeping with the services rendered. 25. In this context, the petitioner cites the decision in Parivar Seva Sanstha Reproductive Heal Services V. The Commissioner, Corporation of Chennai (W.P. No. 32041 of 2019 dated 29.10.2020), and relies specifically upon the views expressed in paragraph Nos. 34 to 36 to the effect that a charity must be fed regularly for it to survive and thrive. 26. The two properties in respect of which exemption is sought are, one, the CHAD, which is part of the hospital and is engaged admittedly in medical work and two, some of the buildings attached to, and part of the College. As far as the CHAD is concerned, I agree with the petitioner that it is entitled to the exemption claimed. 27. It is incumbent upon a charitable institution to find sources to fund its charitable activity. The respondents in their cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s being engaged in, and rendering charitable activities (iv) whether the dominant object of the institution is to render service or to earn profit (v) if the activity does generate profit or the institution earns income from other sources, is such profit/net income ploughed back into the institution or diverted to other avenues/individuals. 35. Prosperity is not the preserve of a commercial institution alone. It is probable, possible and indeed necessary that even charitable organisations including hospitals should be prosperous as increased prosperity will only lead to greater levels of charity and service. The deployment of the profits must however, be a pre-condition to the grant of the exemption. The argument to the effect that the mere existence of profit would debar an institution from claiming exemption, thus, stands rejected. What is necessary is for the respondents to have an appropriate mechanism to test and ensure that such profit if and when earned, is, in fact, utilized to subserve the charitable objectives of that institution. 36. The concept of 'feeding the charity' assumes importance and relevance as unless the institution is well-fed, it will wither a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amendment, Section 123(c), reads as follows, the portion in brackets having been deleted as a result of the amendment: 123. General exemption from property tax:- The following buildings and lands shall be exempt from the property tax-- (a) ................ (b) ........ (c) (Buildings used for educational purpose including hostels attached thereto and places used for the charitable purpose) 36. The amendment does, in my view, overlook the charitable nature of the activity undertaken by a teaching college. It perhaps was intended to address prosperous educational institutions run on profit motive. A teaching institution, by definition, focuses on the dispensation of education in the arena of medicine, both subjects constituting public duty. The fee structure in the college is stated to a sum of Rs. 3000/- per annum only and no other charges are collected. The expenditure is wholly met from out of the fee collection from the hospital, which also treats a section of the society gratuitously. Thus, a distinction must be made between a teaching hospital which is service oriented and other Educational institutions where the dominant object is profit. I would urge that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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