Building Tax Act (Kerala) – S. 3 (b) – Hospital Building – Exemption from building tax can be granted to a hospital building only when medical relief is granted in the hospital free of cost.
2011 (4) KLT 106 : 2011 (4) KLJ 58
C.N. Ramachandran Nair and P.S. Gopinathan, JJ.
Dated this the 9th day of August, 2011
W.A. No. 2415 of 2008
Jubilee Mission Medical College Vs. Government of Kerala
For Appellant : Julian Xavier; For Respondents : Mohammed Rafeeq (P.P.)
J U D G M E N T
C.N. Ramachandran Nair, J.
1. Appellant is a Medical College which claimed building tax exemption in respect of buildings used as hostel for students and hospital for treatment of patients. Learned Single Judge relying on Division Bench judgment of this court in Administrator, Josgiri Hospital, Thalasserry v.Government of Kerala & Another reported in 2008 (3) KHC 612 held that the hospital building does not qualify for exemption from building tax under Section 3(b) of the Kerala Building Tax Act. However, the appellant’s counsel relying on Full Bench judgment of this court in Unity Hospital (P) Ltd. v.State of Kerala reported in 2011(1) KLT 236 contended that the; decision relied on by the learned Single Judge stands reversed by virtue of Full Bench judgment and appellant is entitled to exemption for the hostel building. The Full Bench while considering scope of exemption on buildings used for educational purposes held that students’ hostel attached to educational institutions are not run for commercial purposes but are essentially to provide accommodation to students near the educational institution. The Full Bench held that educational purpose has a wider meaning and, therefore, buildings used by educational institutions for accommodation of students qualify for exemption. Following the said Full Bench judgment we partially allow the Writ Appeal by reversing the judgment of the learned Single Judge to the extent of declining building tax exemption on hostel buildings. Consequently we direct the Tahsildar to identify the buildings used as hostel for students and grant exemption to such building.
2. The second contention raised by the appellant is with regard to claim of exemption for the building in which hospital is run. Even though counsel has relied on Division Bench judgment of this court in Sacred Heart Hospital v. Secretary To Government reported in 2011 (2) KLT 15 what we notice is that the Division Bench while deciding the case has not taken into account earlier Full Bench judgment referred above wherein exemption to hospital building was also specifically dealt with by the Full Bench. The Full Bench examined the scope of Section 3(l)(b) of the Act and held that medical relief as a charity incorporated in the Act through an inclusive definition is only free medical relief. So much so, the Full Bench held that in order to qualify a hospital building for exemption, medical relief for the patients treated in the hospital should be rendered free of cost. In other words where the hospital is run on chargeable basis, the building docs not qualify for exemption under the head “charity” in relation to medical relief which as conceived in the statute is free medical relief. So much so going by the Full Bench judgment appellant is not entitled to exemption for the hospital building because patients treated in the hospital are charged for the medical service rendered.
3. Counsel for the appellant raised an alternate contention that under the Medical Council Regulation. in order to get approval from the Medical Council for starting Medical College, the college should have a hospital attached to it with the prescribed number of inpatient capacity. So much so, the contention raised by counsel is that the hospital attached to Medical College should also be treated as a building used for educational purpose. According to counsel, going by the very same reason applied by the Full Bench in the above referred decision granting exemption to hostel buildings where students are given accommodation on chargeable basis, the hospital building attached to the Medical College should also be granted exemption as it also caters to the educational needs of the medical students. Government Pleader opposed the claim of the appellant by contending that practical training to medical students is only an incidental activity in the hospital where the essential activity is rendering medical service. According to Government Pleader, hospital building is granted exemption under the Act only when medical relief is rendered free of cost. We are unable to accept the contention of counsel for the appellant because exemption to a building has to be considered with reference to the principal use of the building. Unless the building is principally used for the purpose for which exemption is provided, building tax exemption is not available. No one can dispute that the principal use of the hospital building is for rendering medical aid to patients, no matter in the course of the same medical students attached as apprentices with the doctors treating the patients get trained. Therefore, the principal use of the hospital building being rendering medical relief to the patients, the category under which exemption has to be considered even to the hospital building attached to Medical College is charitable purpose. The Full Bench has explained in the judgment above referred that medical relief constitutes charity within the meaning contained in Explanation to Section 3(1)(b) only when it is rendered free of cost. So much so in our view, exemption from building tax can be granted to a hospital building only when medical relief is granted in the hospital free of cost. Admittedly the appellant’s hospital is not rendering free medical relief to the patients treated in the hospital. So much so, exemption was rightly declined by the statutory authorities and upheld by the learned Single Judge. We, therefore dismiss the Writ Appeal on this issue.
In the result, Writ Appeal is allowed in part by modifying the judgment of the learned Single Judge to the extent stated above.
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