ORDER
P. Vishwanatha Shetty, J.
1. The substantial question of considerable importance that would arise for consideration in this petition is, as to what is a 'Charitable Hospital and Dispensary' for the purpose of Section 110(e) of the Karnataka Municipal Corporations Act, 1976 (hereinafter referred to as 'the Act'), for the purpose of grant of exemption from payment of 'property tax'?
2. Chapter X of the Act provides for imposition of various types of taxes/cases as enumerated therein. Section 110 of the Act provides for grant of general exemption from levy of property tax in respect of various categories of buildings and lands. Clause (e) of Section 110 of the Act provides for grant of exemption from property tax in respect of charitable hospitals and dispensaries. It is useful to extract the said provision which reads as hereunder:
'(e) Charitable hospitals and dispensaries but not including residential quarters attached thereto'.
3. The first petitioner, in this petition is a Society - Society of Jesus, Mary and Joseph (hereinafter referred to as 'the Society') registered under the Karnataka Societies Registration Act. The second petitioner- St. Philomena's Hospital (hereinafter referred to as 'the hospital') is established and run by the Society at premises Nos. 1 and 4, Campbel Road, Division No. 62, Bangalore. It is the case of the petitioners that the Society was initially registered on 12th March, 1934 in Guntur, under the provisions of the Societies Registration Act, 1860; and subsequently, the same was registered under the provisions of the Karnataka Societies Registration Act, 1960. Among the several objectives of the Society, which, according to the petitioners, is charitable in nature, the two of the objectives on which emphasis is made by them are, (a)promotion and advance of medical, educational, scientific, technical, social and other charitable works; and (b) to run and administer the institutions for the promotion of education, science and literature, the diffusion of useful knowledge, training in handicrafts, vocational education, technical, social and other charitable works as the Society may deem necessary or convenient for any of its purposes. It is claimed by the petitioners that the property and the income of the Society are applied solely for the promotion of the objects of the Society as set forth in the Memorandum of Association and no portion of it is paid or transferred directly or indirectly by way of dividend, bonus or otherwise, howsoever, to the members of the Society. It is asserted that the hospital was established in the year 1937 by the religious congregations of Catholic Sisters belonging to the Congregation of Jesus, Mary and Joseph to provide free and subsidised health care to the underprivileged sections of society. The activities of the Society of Jesus, Mary and Joseph were taken over by the Society in the year 1973 along with the affairs and management of the hospital. According to the petitioners, the hospital was being recognised as a charitable institution from its inception and in recognition of that, Municipal Commissioner, Civil and Military Station, Bangalore, had initially made a grant of Rs. 75/- per month in the year 1940, which came to be increased from time to time, and in the year 1992, the grant was enhanced to Rs. 1,500/- per month. It is the further case of the petitioners that the Corporation, by means of its resolution dated 8th December, 1964 made in Resolution No. 239 (277), granted exemption from payment of property tax in respect of premises No. 1, Campbel Road, Bangalore, with effect from 1st April, 1964 under Section 101(c) of the City of Bangalore Corporation Act. It is their further case that when both the premises bearing Nos. 1 and 4, Campbel Road, had been granted exemption under Section 101(c) of the City of Bangalore Corporation Act, 1949, without any justification, the petitioners were served with the special notice dated 21st October, 1992 by the fourth respondent under Sections 109 and 143 of the Act calling upon them to pay a sum of Rs. 2,72,643-75 Ps., with effect from 1st October, 1985 as 'property tax' in respect of property bearing No. 4, Campbel Road, on the ground that the assessment in respect of the said property had earlier escaped; and pursuant to the said notice, the petitioners had filed their objections before the fourth respondent, inter alia, contending that since the building in question is used as a charitable hospital, the said building is exempted from payment of property tax under Section 110(e) of the Act; and in spite of the said objections, the third respondent, by means of his order dated 5th March, 1993, a copy of which has been produced as Annexure-J to the writ petition, confirmed the proposal made with regard to the annual rental value; and thereafter, a demand notice dated 15th March, 1993, a copy of which has been produced as Annexure-K to the writ petition, was issued. The materials on record shows that aggrieved by the said order, the petitioners had filed Writ Petition No. 9077 of 1993 before this Court praying to quash the notice Ahnexure-K, dated 15th March, 1993. However, the said writ petition was disposed of by this Court on 12th October, 1998 on theground that the petitioners were required to file an appeal before the second respondent-Standing Committee in terms of Rule 18 of the Taxation Rules of the Corporation. The second respondent-Standing Committee, by means of its order dated 18th February, 2000, a copy of which has been produced as Annexure-N, rejected the appeal filed by the petitioners on the ground that the second petitioner-Hospital was collecting charges from the in-patients of the Hospital towards room charges; and as such, under Section 110(e) of the Act, it is not permissible for the second respondent-Standing Committee to grant exemption sought for by the petitioners. Aggrieved by the said order and also the consequent demand notice dated 6th March, 2000, a copy of which has been produced as Annexure-A to the writ petition, issued by the fourth respondent calling upon the petitioners to pay a sum of Rs. 30,17,813.00 towards 'property tax' and a sum of Rs. 9,48,930.00 towards 'cess', in all a sum of Rs. 46,63,743.00, in respect of property bearing No. 4, Campbel Road, for the period from 1st October, 1985 to 1st April, 2000, this petition has been filed under Articles 226 and 227 of the Constitution of India.
4. The learned Counsel appearing for the petitioners, challenging the correctness of the notice Annexure-A, dated 6th March, 2000 and order Annexure-N, dated 18th February, 2000, made three submissions. Firstly, he submitted that since both premises Nos. 1 and 4, Campbel Road, are being used as charitable hospital and dispensary by the petitioners, the respondents ought to have held that the said premises are exempted from payment of property tax in terms of Section 110(e) of the Act. Elaborating this submission, the learned Counsel pointed out that since the exemption had already been granted in respect of both the premises under Section 101(c) of the City of Bangalore Corporation Act, 1949 on the ground that the second petitioner is a charitable hospital and dispensary, notice Annexure-G, dated 21st October, 1992 issued by the fourth respondent and order Annexure-J, dated 5th March, 1993 made on the objections filed by the petitioners to the notice Annexure-G are wholly illegal and without the authority of law. He further submitted that this aspect of the matter has been overlooked by the second respondent-Standing Committee while passing order Annexure-N. It is his further submission that since the second petitioner-Hospital is being run as a charitable hospital and dispensary, and free treatment is being given to poor patients who are admitted to General Ward and who are unable to pay any money, merely because some charges are collected from the affluent patients who are admitted to Special Ward, is not a ground to deny exemption available to the petitioners in respect of the premises in question in terms of Section 110(e) of the Act. It is his submission that the entire income earned or received by the petitioners is being utilised to maintain the hospital and for the treatment given to all the patients and more particularly, the poor patients in the hospital. He also submitted that free treatment is being given to all sections of the society who are poor and unable to bear medical expenses and is not limited to any particular caste or religious faith. It is his further submission that the hospital is managing the register of patients who are givenfree treatment; and accounts has been maintained properly and audited every year; and it clearly shows that there has not been any surplus income. In this connection, he referred to me the objections filed by the petitioners before the second respondent pursuant to notice Annexure-G and also the averments made in paragraphs 15 and 16 of the writ petition. It is his submission that the hospital is being run on 'no profit no loss' basis and with the avowed object of rendering medical services to the poor and needy. Secondly, he submitted that order Annexure-J and also order Annexure-N are liable to be quashed on the ground that there is absolutely no application of mind with regard to the claim made by the petitioners that the premises in question are entitled for exemption from payment of property tax under Section 110(e) of the Act. It is his submission that the authorities have totally misunderstood and misread the provisions of Section 110(e) of the Act, which exempts the building of 'charitable hospital and dispensary'. Finally, the learned Counsel for the petitioner submitted that the Appellate Authority has proceeded to reject the appeal filed by the petitioners on the short ground that the second respondent-Standing Committee has no power to examine the question, whether the petitioners were entitled for exemption under Section 110(e) of the Act.
5. However, Sri Ashok Haranahalli, learned Counsel appearing for the Corporation, while strongly supporting the impugned orders, submitted that the assertion made by the petitioners that the second petitioner-hospital is a charitable hospital, is totally contrary to the facts. It is his submission that unless the hospital is established, maintained and run for charitable purpose, the petitioners are not entitled for the benefit of Section 110(e) of the Act. According to Sri Haranahalli, if a hospital collects charges from the patients for the treatment given, the said hospital cannot be considered as a charitable hospital for the purpose of Section 110(e) of the Act. According to him, it is only the hospitals which are not collecting any charges from the patients who receive treatment in the hospital, that could be considered as charitable hospitals and dispensaries for the purpose of Section 110(e) of the Act and the buildings and lands of such hospitals and dispensaries alone are entitled for exemption from payment of property tax. Sri Haranahalli alternatively submitted that even assuming that the hospital collects charges only from affluent and rich patients, the petitioners must establish that major and substantial portion of the beds in the hospital are utilised only for charitable purposes and major portion of the treatment and medical facilities given in the hospital is for poor patients who are unable to bear the medical expenses. It is his submission that the collection of the charges should be only nominal and only from affluent patients. It is his submission that the second petitioner-hospital is making selection of patients even in the matter of free treatment given to some of the patients. He submitted that if a hospital/dispensary makes a choice of patients even for free treatment on the ground of religion and caste or any other extraneous reasons, such a hospital will not be entitled for the benefit of exemption from payment of property tax under Section 110(e) of the Act. Further, relying upon the decision of the Supreme Court inthe case of Mediwell Hospital and Health Care Private Limited v. Union of India and Ors., he submitted that a hospital must, in advance, notify every month as to who are entitled for free treatment both as out-patients and as in-patients, and the same having not been done by the petitioners all these years, the petitioners cannot claim any exemption from payment of property tax. It is his submission that the materials on record would clearly show that free treatment stated to have been given by the petitioners to the so-called poor patients is limited only to a selected class of patients belonging to a particular religion, faith and caste. Therefore, he submitted that when the authorities, on examination of the materials on record, have found that the petitioners are not entitled for exemption from payment of property tax, this Court, in exercise of its writ jurisdiction, should not interfere with the said decision of the authorities. In support of his submissions, Sri Haranahalli relied upon the decisions in the cases of Minister of National Revenue v. Trusts and Guarantee Company Limited and Reg v. Commissioner of Income-tax.
6. In the light of the rival contentions advanced by the learned Counsels appearing for the parties, the two questions that would arise for consideration in this petition, are--
(i) What is the 'charitable hospital and dispensary' for the purpose of Section 110(e) of the Act?
(ii) Whether the impugned order Annexure-N, dated 18th February, 2000 and notice Annexure-A, dated 6th March, 2000 are liable to be quashed?
Re. Question (i):
7. Nowhere in the Act 'charitable hospital and dispensary' has been defined or explained. Webster's Encyclopedia Unabridged Dictionary of the English Language defines 'Charitable' as 'generous in gifts to relieve the needs of indigent or otherwise helpless persons, or of animals'. In the same dictionary, 'charity' has been described as 'performing other benevolent actions of any sort for the needy with no expectation of material reward; something given to a person or persons in need'. According to the World Book Dictionary, 'charitable' means 'generous in giving help to poor, sick or helpless people; benevolent and kind'. The same dictionary refers to 'charity' as 'generous giving to the poor or to organisations which look after the sick, poor and the helpless'. According to Oxford Advance Learners' Dictionary, 'charitable' means 'generous in giving money, food etc., to poor people'. In the same dictionary, 'charity' has been referred to as 'a society or an organisation for helping people in need; the aim of giving money, food, help etc., to people in need'. Section 2(15) of the Income-tax Act defines 'charitable purpose' thus:
' 'Charitable purpose' includes relief of the poor, education, medical relief and the advance of any other object of general public utility'.
From the meaning given to 'charitable', 'charity' and 'charitable purpose' in various well-known dictionaries and the Income-tax Act, what is clear is that the benevolent purpose or the benefit that is extended, must be to relieve the poor, sick or the needy. Therefore, it appears to my mind that 'charitable' means anything done gratuitously, any assistance given, help rendered to relieve the hardship of the poor, sick, needy and the deserving; and it is only such an act that can be considered as a charitable act. Now, in the context of understanding what is meant by charitable hospital and dispensary, to my mind it appears, that a charitable hospital and dispensary means a hospital/dispensary which is established and being run and where treatment is given and diagnosis of ailments of patients are made and where an effort is made to treat ailments of patients who are poor, needy and who are not in a position to meet the expenses required for their treatment on account of financial difficulties and constraints. The treatment so given, the diagnosis so made, the facilities so extended to patients in the hospital must be to the poor, needy and deserving on account of their financial constraints who are not in a position to meet the expenses of the treatment which they are required to secure from the hospital/dispensary or from a doctor. Any gratuitous act or treatment given to a VIP or person/s well-placed in life, who do not deserve or require any financial assistance or free treatment done in a hospital, cannot be considered as an act of 'charity' or 'charitable' one. Such acts cannot be taken into account while considering whether a hospital or a dispensary is a charitable hospital or a charitable dispensary. The object of establishment and continuance of the hospital and the dispensary must, for all purposes, strictly conform to the requirements of what is understood as 'charity' and a 'charitable' act. Therefore, while considering the question whether a hospital or a dispensary is a charitable hospital/dispensary or not, what is required to be considered is as to what is the object of establishing such a hospital/dispensary and as to how it is being run and what is the purpose of its continued existence whether it is meant to relieve the hardship and extends medical facilities to the poor and the needy or it is meant to oblige the rich and the affluent who do not require any financial assistance in the form of free medical treatment or it is being run as a commercial venture; and whether such hospital/dispensary has been established and is being continued to support the needs of any particular caste or a religious faith. In my view, three conditions, which are required to be satisfied to get the benefit of exemption under Section 110(e) of the Act are, (1) the doors of such hospitals/dispensaries should be always kept open to all persons irrespective of any caste, creed, religious faith or sects; (2) such persons should be poor, needy and deserving persons who, on account of financial incapacity, are not in a position to get medical aid by paying money; and (3) the process of selection of patients for treatment among the three classes, referred to above, must be objective, transparent, fair, reasonable and free from any arbitrariness. That does not mean that for the purpose of running a charitable hospital/dispensary, if the facilities in the hospital are made available to the affluent and rich patients and if they are charged for the services rendered with a view to organise funds required to such a hospital, such a hospital will not lose the characteristic of a charitable hospital/dispensary. I am unable to accede to the contention of Sri Haranahalli that it is only such of those hospitals and dispensaries which totally give free medical aid and which do not collect any charges from patients either in-patient or out-patient, which can be treated as charitable hospitals and dispensaries and are entitled for exemption under Section 110(e) of the Act. It is necessary to point out that in a society like ours, where the country is still a developing country and where large sections of people are poor and not free from hunger and disease, the State alone, out of its revenue, cannot provide free medical aid to all those poor persons who are in need of it. Therefore, presumably, keeping that in view and with a view to encourage charitable attitude among the philanthropists, a provision like Section 110(e) of the Act has been made providing for exemption from payment of property tax in respect of a building and land used as charitable hospital/dispensary. There cannot be any doubt that it is only with a view to facilitate medical aid to the poor and needy and with a view to reduce financial burden of such charitable hospitals and dispensaries, such a provision has been made. The burden of running a charitable hospital and dispensary which is established and continued for the purpose of giving free subsidized medical aid, can be reduced by various methods, (1) by granting exemption from payment of property tax in respect of the buildings solely used as charitable hospital/dispensary; (2) by raising donations from the rich and affluent; (3) by free service rendered by the doctors and other social groups in the hospital. The resources raised from all these may not be sufficient to cater to the needs of large sections of poor ailing patients who require medical treatment and that too, with the high degree of competency and proficiency and infrastructure developed with all the modern facilities established. For this, one of the modes of raising funds could be by making available some portion of the facilities available in the hospital to affluent and the rich patients and charging them for the services and the treatment given to them. Therefore, if the object of establishing and running a hospital and its continued existence, is to give medical aid to the poor and the deserving either totally free or to a large extent subsidised, if such a hospital collects substantial charges from the affluent and rich patients put of some portion of the facilities available in the hospital extended to them, in my view, as observed earlier, such hospitals and dispensaries cannot be considered as not charitable hospitals and dispensaries. In my considered view, accepting the submission of Sri Haranahalli would do more harm to the object and the principle of extending charity to others and the establishment of a charitable hospital and dispensary. The view I have expressed above is also supported by the observations made by the Supreme Court in the case of MunicipalCorporation of Hyderabad v. Hyderabad Race Club. The Supreme Court, at paragraph 3 of the judgment, has observed as follows:
'The High Court launched upon an exercise to ascertain whether the income of the Race Club was used for a charitable purpose. And on perceiving that some of the purposes for which the income was to be employed were charitable purposes concluded that the exemption under Section 202(1)(b) was available. The test to apply is to seek an answer to the question: to what use is, the property put or for what purpose is the property put. And to ascertain whether such occupation or user is for a 'charitable' purpose. In the present case the occupation and user is to conduct horse-races and to train horses for racing. Unless it can be posited that conducting of horse-races is a charitable purpose, it cannot be concluded that the exemption envisioned by Section 202(1)(b) is attracted. And even if one were to take the most 'charitable' view as regards the meaning and content of the expression 'charitable' conducting of horse-races or training of horses for the races cannot be said to be charitable activity. The expression charitable in the context of Section 202(1)(b) means a benevolent activity calculated to benefit the poor or the deprived. Surely horse racing is not such a benevolent activity, however charitable a view one takes'.
(emphasis supplied)
In the case of Southwell v. Governors of Royal Holloway College, Egham, Grantham, J., while considering the question that the buildings belonging to and used by the Royal Holloway College for the education of women, conies within the exemption from inhabited house duty, has observed thus:
'... Originally that school was formed for the purpose of providing a gratuitous education entirely; now, its main object is not to provide a gratuitous education, but to provide for those who can pay the necessary fees of a high-class public school; and it must not be forgotten that the Charterhouse School buildings at Godalming were, as I understand it, originally built out of endowment money in the same way that the buildings were erected at the Holloway College, so that free buildings do not make a charity school; and as the primary object of this college is not free education, but the highest class education combined with the luxuries of college life, it would require a very strong authority to make me conclude that this was a 'charity school''.
Again, the learned Judge has observed thus:
' ... I quite agree with the decision of my brother Charles in Cawse v. Nottingham Lunatic Hospital, that the word 'poor', in the exemption of 'house provided for the reception or relief of poor persons', only applies to the 'house' so provided; but we must not forget that the other words in the schedule, 'hospital or charityschool', indicate buildings for the use of which no pecuniary advantage is obtained; and in interpreting the word 'charity' you cannot, therefore, divorce it from the word 'school'; so that we have not to determine what is a 'charity' or what is a 'charitable purpose', which has been the question in so many of the cases cited during the argument, but what is a 'charity school', I have not alluded to the other cases cited during the course of the arguments, because I can find nothing in the judgments there delivered helping us to a decision in this case; but, for the reasons above given, in my judgment this college and buildings are not exempt from inhabited house duty as coming within the exemption of the Act 48 Geo. 3, C. 55, Schedule 'B''.
In the said decision, Charles, J., has observed thus:
'The question, then, to be determined is, what is the character of Holloway College? Can it be said to be, taken as a whole, charity school? Now, I do not propose to attempt any definition of the word 'charity' as used in Schedule 'B'. But I think there can be no doubt that the language of the Schedule contemplates institutions whose primary object is the maintenance or education of those who cannot in the one case afford to maintain themselves, or in the other to pay for their own education institutions, in other words, eleemosynary in character. A 'hospital' certainly is primarily intended to receive patients who do not pay for their treatment. 'A house provided for the reception or relief of poor persons' is a poorhouse, and nothing else. And the words 'charity school' must, in my opinion, be interpreted, having regard to the preceding and succeeding words, as 'school primarily intended for the supply of gratuitous education'. If that condition is fulfilled, then the exemption will be available, even though the pupils who are educated contribute towards the expense of education; just as a 'hospital' remains a hospital entitled to exemption although in a particular year it may receive fees to a large amount from paying patients. But, in the case of Holloway College there does not appear to have even been an intention to supply gratuitous instruction to any pupil, rich or poor'.
8. Now, the other question is, what should be the reasonable limits within which the facilities in a hospital and dispensary could be extended to patients, both in-patients and out-patients who are affluent and rich for the purpose of collecting charges for the services so rendered. To my mind, it appears that if a hospital extends free treatment around 50 (fifty) per cent with little variation to the poor, needy and other patients who, on account of financial constraints, are not able to meet the medical expenses, and the remaining 50 (fifty) per cent or around that, charges are collected from others who can afford to pay, such a hospital or dispensary, would satisfy the requirement of a charitable hospital and dispensary. However, it is needless to observe that the entire income derived by charging the patients, as stated above, should be solely utilised by the hospital/dispensary for the benefit of thehospital and for the benefit of the poor and the deserving, needy patients. The hospital is permitted to charge and collect money from the rich and affluent only with a view to make the hospital viable and with a view to get the best and qualitative treatment to the poor and the needy whenever it is required by them. Insofar as out-patients are concerned, it would not be permissible for the hospital to limit the extension of the medical facility to a limited number of poor patients. It has to be for all those who approach the hospital seeking free treatment. However, insofar as in-patients are concerned, it could be subject to the availability of the beds and other facilities in the hospital. The funds generated by the hospital by charging the patients has to be utilised, as noticed by me earlier, for the benefit of other poor and deserving patients. This does not mean that an additional income earned, in a particular year, cannot be carried over for future development and to be spent in a near future i.e., within a year or two of such accumulation. With a view to avoid any unnecessary controversy as to whether a particular institution is a charitable hospital/dispensary or not, it is desirable that the hospital concerned, at the beginning of the year itself, makes it public its programme of giving free treatment to the seekers of free medical aid in the hospital by giving wide publicity in leading newspapers and Notice Board of the hospital and office of the Corporation and other public places. In this connection, it is useful to refer to the decision of the Supreme Court in the case of Mediwell Hospital and Health Care Private Limited, supra, relied upon by Sri Haranahalli. In the said case, while considering the question whether a Diagnostic Center/Charitable Hospital is exempted from payment of customs duty, the Supreme Court, at paragraph 8 of the judgment, referred to the conditions imposed in the notification issued by the Government of India. In my view, similar guidelines also could be adopted by hospitals which seek exemption under Section 110(e) of the Act. The relevant portion of the observation made by the Supreme Court, reads as follows:
'.. . . The notification in question also provided certain conditions to be satisfied by the hospitals in question which intend to import the equipment before claiming the exemption under the notification. The said conditions are enumerated in the table to the notification which is extracted hereinbelow:
'(1) All such hospitals as may be certified by the said Ministry of Health and Family Welfare to be run or substantially aided by such charitable organisation as may be approved from time to time, by the said Ministry of Health and Family Welfare.
(2) All such hospitals which may be certified by the said Ministry of Health and Family Welfare, in each case, to be run for providing medical, surgical or diagnostic treatment not only without any distinction of caste, creed, race, religion or language but also.--
(a) free, on an average, to at least 40% of all their outdoor patients; and
(b) free to all indoor patients belonging to families with an income of less than rupees five hundred per month, and keeping for this purpose at least 10 per cent of all the hospital beds reserved for such patients; and
(c) at reasonable charges, either on the basis of the income of the patients concerned or otherwise, to patients other than those specified in Clauses (a) and (b)'.
Clauses 3 and 4 of this notification also indicate the preconditions to be satisfied before the certificate in question is issued....'.
Further, the Supreme Court, at paragraphs 12 and 13 of the said decision, has observed thus:
'12. While, therefore, we accept the contentions of Mr. Jaitley, learned Senior Counsel appearing for the appellant that the appellant was entitled to get the certificate from respondent 2 which would enable the appellant to import the equipment without payment of customs duty but at the same time we would like to observe that the very' notification, granting exemption must be construed to cast continuing obligation on the part of all those who obtained the certificate from the appropriate authority and on the basis of that to have imported equipments without payment of customs duty to give free treatment at least to 40 per cent of the outdoor patients as well as would give free treatment to all the indoor patients belonging to the families with an income of less than Rs. 500/- p.m. The Competent Authority, therefore, should continue to be vigilant and check whether the undertakings given by the applicants are being duly complied with after getting the benefit of the exemption notification and importing without payment of customs duty and if on such enquiry the authorities are satisfied that the continuing obligations are not being carried out then it would be fully open to the authority to ask the persons who have availed of the benefit of exemption to pay the duty payable in respect of the equipments which have been imported without payment of customs duty. Needless to mention the Government has granted exemption from payment of customs duty with the sole subject that 40% of all outdoor patients and entire indoor patients of the low income group whose income is less than Es. 500A p.m. would be able to receive free treatment in the institute. That objective must be achieved at any cost, and the very authority who have granted such certificate of exemption would ensure that the obligation imposed on the persons availing of the exemption notification are being duly carried out and on being satisfied that the said obligations have not been discharged they can enforce realisation of the customs duty from them.
14. It is needless to reiterate that all the persons including the appellant who had the benefit of importing the hospital equipment with exemption of customs duty under the notification should notify in the local newspaper every month the total number or patients they have treated and the 40% of them are the indigent persons below stipulated income of Rs. 500/- per month with fullparticulars and address thereof which would ensure that the application to treat 40% of the parties free of cost would continuously be fulfilled. In the event of default, there should be coercive official action to perform their obligation undertaken by all such persons. This condition becomes a part of the exemption order application and strictly be enforced by all concerned including the Police personnel when complaints of non-compliance were made by the indigent persons, on denial of such treatment in the concerned hospital or diagnostic centres, as the case may be'.
From the above observation made by the Supreme Court, it is clear that the institutions which get the benefit of exemption from payment of tax/duty, are under an obligation to live upto and discharge the duties in terms of the benefit extended to it under the provisions of law; and obligation is also cast on the authority who grants exemption under law to watch as to whether the beneficiaries of exemption discharge their obligations keeping in mind the spirit of the exemption granted to them.
9. Now, one other question that is required to be adverted to is, what is the procedure that is required to be followed for grant of exemption from payment of property tax under Section 110(e) of the Act? If one looks into the Scheme, Section 103(b) of the Act provides for tax on buildings or lands or both situated within the municipal limits. Such tax is described as 'property tax'. Section 108 of the Act mandates the Corporation to levy the property tax on all buildings and lands within the limits of the Corporation if the Corporation has resolved to levy the property tax, except such of those buildings or lands exempted by or under the Act or any other law. Therefore, I am of the view that it is reasonable to hold that the institution/person who seeks exemption under Section 110(e) of the Act, should make a written request every year before the Assessing Authority of the Corporation; and if such a request is made, the Assessing Authority is under an obligation to consider the same and pass appropriate orders on the merits of the claim before proceeding to assess the tax in respect of the building/land of such an institution/person.
Re. Question (ii):
10. Now, the only question that would arise for consideration is, whether the impugned order and notice are liable to be quashed? It is the case of the petitioners that under the City of Bangalore Municipal Corporation Act, 1949, exemptions were granted in respect of premises Nos. 1 and 4, Campbel Road, where the hospital and dispensary of the second petitioner is located; and some grant was also given by the Corporation. In this background, I am of the view that when Section 110(e) of the Act provides that a building and land of a charitable hospital or dispensary are exempted from payment of tax, the Assessing Authority has a duty to consider whether the second petitioner is a charitable hospital and dispensary which is entitled for exemption under Section 110(e) of the Act. Merely because applications are not filed by the petitioners in advance seeking exemption, in my view, in the facts and circumstances of this case, is not a ground to reject the claim of thepetitioners for exemption, if on merits, the petitioners are so entitled for such an exemption. It may be that in the backdrop of the facts, that the exemption was earlier granted under the City of Bangalore Municipal Corporation Act, 1949, the petitioner did not claim exemption in advance. However, when the objections were filed pursuant to notice Annexure-G, the Appellate Authority, while passing the order Annexure-E, should have considered it keeping in mind the spirit of Section 110(e) of the Act and the merits of the claim made by the petitioners for such an exemption. If it had any doubt with regard to the number of patients who are being charged and the patients who are given free treatment or treatment at subsidised rates and with regard to the utilisation of the income derived by the second petitioner-hospital, the Appellate Authority could have summoned the accounts and examined the registers and other relevant documents maintained by the hospital regarding the patients who have been treated, and their background. The authorities should consider the several matters referred to by me, while considering the first question. Admittedly, the same has not been done. Even the second respondent-Standing Committee while passing order Annexure-N did not apply its mind to the matters referred to above. The only reason assigned in order Annexure-N is that on inspection, the second respondent found that some patients were being charged by the second petitioner-hospital. As noticed by me earlier, that alone cannot be the basis to reject the claim of the second petitioner. Order Annexure-N passed by the Appellate Authority and Annexure-G issued by the fourth respondent, in my view, are liable to be quashed on the ground that they are not speaking orders and are vitiated for lack of application of mind with regard to the questions that were required to be considered by the authorities. Further, in the light of the submission that the Standing Committee has rejected the appeal on the ground that it has no power to consider the claim for exemption, it is also necessary to clarify that once the question whether the institution is entitled for exemption or not, is considered by the Assessing Authority, the Appellate Authority as well as the Standing Committee are entitled to deal with the said question when appeals are filed before them.
11. In the light of the discussion made above, I make the following: