1996 (9) TMI 662 - HC - Indian Laws

Court grants statutory property tax exemption to charitable hospital under Coimbatore Municipal Act

PSG and Sons Charities Versus City Municipal Corporation

The court ruled in favor of the petitioner, a charitable trust operating a hospital, granting statutory exemption from property tax under Section 123 of ... - Issues Involved:1. Statutory exemption from property tax for buildings used for educational purposes and charitable hospitals.2. Validity of tax assessments exceeding a period of three years.3. Consideration of depreciations in property tax valuation.4. Opportunity for representation for exemption under Section 167 of the Act.Detailed Analysis:Issue 1: Statutory Exemption from Property TaxThe petitioner, a charitable trust, contended that buildings used for housing the Medical College and PSG Hospitals qualify for statutory exemption under Section 123 of the Coimbatore City Municipal Corporation Act. Section 123(e) exempts 'charitable hospitals and dispensaries' from property tax. The petitioner argued that the PSG Hospitals, being charitable, should be exempt from property tax. The respondent countered that the hospital collects rent from occupants, disqualifying it from exemption. However, the court referred to the decision in S.N.R. Sons Charitable Trust v. The Commissioner, Coimbatore City Municipal Corporation, which held that payments made by patients as hospital charges cannot be equated to 'rent' as contemplated under the Act. Consequently, the court ruled that the petitioner is exempt from paying property tax for the hospital under Section 123(e).Issue 2: Validity of Tax Assessments Exceeding a Period of Three YearsThe petitioner argued that the tax assessments made by the respondent Corporation were invalid as they related to a period exceeding three years, violating Section 168 of the Act. Section 168 allows the Commissioner to assess escaped property tax within three years from when the person should have been assessed. The court found that the notices issued on 24.4.1992 were based on escaped assessment and were valid only for the period within three years from the date of assessment. Therefore, the tax claimed for the period before the second half of 1989-90 was barred by time and set aside.Issue 3: Consideration of Depreciations in Property Tax ValuationThe petitioner contended that the respondent Corporation failed to consider certain depreciations while valuing the buildings for property tax purposes. The court did not provide a detailed analysis of this issue but implicitly acknowledged the petitioner's right to challenge the valuation method by allowing the petitioner to seek exemption under Section 167.Issue 4: Opportunity for Representation for Exemption Under Section 167The petitioner sought an opportunity to make a representation to the respondent Corporation and the Government for exemption from property tax under Section 167 of the Act. Section 167 allows the council, with Government sanction, to exempt any person or class of persons from paying any tax. The court granted the petitioner liberty to make such a representation, recognizing the petitioner's right to seek exemption.Conclusion:The court allowed WP No. 13190 of 1992, quashing the assessment in 9029 dated 24.4.1992. It set aside the tax claimed for the period before the second half of 1989-90 in WP Nos. 13191 to 13194 of 1992. The petitioner was given liberty to seek exemption under Section 167 of the Act. No order as to costs was made.