Public Charitable Trust exempt from property tax for Eye Hospital under Tamil Nadu law

The Court allowed the writ petitions filed by the petitioner Trust, challenging the assessment and demand of property tax for their Eye Hospital. The Court held that the Trust, being a Public Charitable Trust providing essential eye care services, is exempt from property tax under section 86(e) of the Tamil Nadu District Municipalities Act, 1920. The impugned demand notice and resolution were set aside, and the Town Panchayat was directed to refund the amounts collected from the Trust within twelve weeks.

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Issues Involved:
1. Assessment and demand of property tax on the petitioner Trust's hospital.
2. Exemption from property tax for charitable hospitals.
3. Legality of the demand notice and resolution by the Town Panchayat.
4. Compliance with interim orders and refund of amounts paid.

Summary:

Issue 1: Assessment and Demand of Property Tax
Both writ petitions were filed by the petitioner Trust challenging the assessment and demand of property tax by the second and third respondents for the Eye Hospital run by the Trust. The first writ petition (W.P. No. 14414 of 1999) challenged the proceedings dated 29.9.1998 and 24.11.1998, while the second writ petition (W.P. No. 14415 of 1999) challenged the resolution dated 24.5.1999 by the third respondent Town Panchayat, which denied the exemption from property tax.

Issue 2: Exemption from Property Tax for Charitable Hospitals
The petitioner Trust argued that it is a Public Charitable Trust providing significant services in eye care and should be exempt from property tax u/s 86(e) of the Tamil Nadu District Municipalities Act, 1920, which exempts "charitable hospitals and dispensaries but not including residential quarters attached thereto." The Trust cited previous judgments where similar exemptions were granted to their hospitals in Madurai and Tirunelveli.

Issue 3: Legality of the Demand Notice and Resolution
The petitioner Trust contended that the demand notice and resolution were unjustified, as the charges collected by the hospital were for medical services and not "rent" as defined in the relevant municipal acts. The Court referenced earlier judgments, including a Division Bench decision, which clarified that payments for hospital services cannot be equated to rent, thus supporting the Trust's claim for exemption.

Issue 4: Compliance with Interim Orders and Refund of Amounts Paid
Pending the writ petitions, an interim stay was granted, later made absolute on the condition that the petitioner Trust pays 50% of the demanded amount. The Trust complied with this order, making several payments. The Court noted that the respondents failed to justify the tax demand despite multiple opportunities. Consequently, the writ petitions were allowed, and the impugned demand notice and resolution were set aside. The Court directed the third respondent Town Panchayat to refund the amounts collected from the petitioner Trust within twelve weeks.

Conclusion:
The Court concluded that the petitioner Trust is entitled to exemption from property tax u/s 86(e) of the Tamil Nadu District Municipalities Act, 1920. The writ petitions were allowed, and the demand notice and resolution by the Town Panchayat were set aside. The respondents were directed to refund the amounts collected from the petitioner Trust.

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