TaxTMI 
TaxTMI 
2001 (6) TMI 68
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....edical Education of the State Government has to inspect the hospital and satisfy himself with regard to the compliance of the parameters laid down in Notification No. 64/88. Thereafter the Secretary to Government, Health Department of the State Government recommends the case of the petitioner to the Ministry of Health, Department of Family Welfare, New Delhi. After considering the claim of the petitioner for the import of such life saving equipments and for exemption of the Customs Duty thereof, it is for the Director General of Health Services (DGHS in short) to issue the certificate exempting the payment of Customs Duty (hereinafter called the CDEC). Such certificate are to be produced before the Customs officials and the equipments will be released without the payment of Customs Duty. 3.The case of the petitioner is that the Director General of Health Services, under the impugned proceedings dated 28-1-1998 in W.P. 2110 of 1998 had kept the application of the petitioner for the issue of the Customs Duty Exemption Certificate for considerable long period and rejected the same without furnishing the particulars furnished by the petition and in some cases had cancelled the Custo....
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....rvices to reject the application. (8) The Director General of Health Services totally failed to consider the particulars furnished by the petitioners with regard to the part compliance of the requirement of Clause 2 of the Table to the notification. 4.The respondents 1 and 2 viz. Ministry of Health and Family Welfare and the Director General of Health Services respectively have filed counter affidavit stating that a public interest litigation was filed before the Delhi High Court by Peoples Union for Civil Liberty in W.P. No. 409 of 1996 alleging that the Health Department has been issuing certificates without proper verification. In the said writ petition, the Delhi High Court had passed certain orders. On 23-5-96 the Court appointed one Mr. Chandramouli to enquire into the allegation by formulating certain terms of reference. On 29-8-86 the said Mr. Chandramouli submitted a Report stating that there is prima facie reason to believe the commission of large scale illegalities at different levels in the Government with respect to the issue of CDEC. By order dated 18-10-96 the Delhi High Court has appointed two Committees, the first one....
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....ion of the petitioner institution as they were found to be not fulfilling the obligations set out in the Notification No. 64/88. 5.Mr. Habibullah Basha, the learned Senior Counsel appearing for the petitioners contended that the impugned orders have been passed solely on the ground that the petitioners have not fulfilled the condition No. 2 of the Table to the Customs Notification No. 64/88 with regard to the free treatment. His contention is that even though a percentage had been fixed under the said notification for providing free treatment by the petitioner's hospital, it is not the case of the respondents that the petitioners did not comply with such requirement by avoiding such fulfilment either by evasion or by refusal. When the persons who are eligible for such free treatment are not available, the petitioners cannot be found fault with from their entitlement of the Customs Duty Exemption on the ground that they have not fulfilled such condition or requirement. Even as per the terms of the notification, only provision should be made for and that has been done. Only if it can be established by the respondent that in spite of the availability of such eligible persons or pat....
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....claimed the exemption in terms of the said notification, it is their duty to establish that they fulfilled the conditions imposed thereunder. In Mediwell Hospital case the Supreme Court has held that the compliance of the condition imposed under Clause 2 of the Table to the Notification 64/88 is absolutely necessary for the entitlement of the Customs Duty Exemption Certificate. Any one who do not fulfil the conditions or the obligations contemplated under the said Clause, such persons are not entitled for the Customs Duty Exemption. The respondents had scrupulously followed the principles laid down by the Supreme Court and wherever Clause 2 of the Table to the said Notification 64/88 was not complied with, the certificates were cancelled or where the applications are pending, the same were rejected. It is not the case of the petitioners that they fulfilled the requirement of Clause 2 of the Table to the Notification 64/88. So far as the contention regarding the violation of principles of natural justice is concerned, he vehemently contended that in some of the cases, particulars were called for by way of proforma and the cases were decided on the basis of the particulars furnished ....
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....eking the Customs Duty Exemption Certificate. The petitioners admittedly imported certain life saving equipments pursuant to the Customs Notification 64/88 whereunder the Government had granted the exemption of Customs Duty in respect of those equipments. The case of the respondent is that the petitioners had not fulfilled the obligations specified under the said notification. When once the discharge of obligation specified under the said notification is a condition precedent for the grant of exemption, unless the petitioners establish that they fulfilled such conditions, they are not entitled for the exemption of Customs Duty. Hence it is necessary to consider Clause 2 of the Table to the said notification and also whether the petitioners had not complied with the same. 8.The questions for consideration are : (1) Whether the petitioners did not comply with the requirement of Clause 2 of the Table to the said Notification 64/88 Customs. (2) Whether the impugned proceeding is in violation of the principles of natural justice. (3) Whether the secon....
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....rovided that in the case of import of spare parts, no approval as specified in paragraph 1 will be required subject to the condition that - (i) the spare parts are imported by the hospital; (ii) the hospital will, at the time of importation, produce a certificate from the Ministry of Health and Family Welfare or the Directorate General of Health Services that the said hospital falls in one of the categories of hospitals specified in the said Table; (iii) the Head of the hospital certifies that the spare parts in question are required for the maintenance of an imported equipment in use with the hospital and such parts will not be used for any other purpose. TABLE 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 certifi....
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.... unequivocal terms had held as follows : "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 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 have obtained the certificate from the appropriate authority and on the basis of that 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 give free treatment to all the indoor patients belonging to the families with an income of less than Rs. 500 per month. ..... Needless to mention the Government has granted exemption from payment of Customs duty with the sole object that 40% of all outdoor patients and entire indoor patients of the low income group whose income is less than Rs. 500 per month would be able to receive free treatment in the institute. That object must be achieved at any cost, and the very authority who have g....
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.... this ground the decision in Mediwell Hospital case does not lay down correct law. 16.So far as the compliance of Clause 2(a) & (b) of the Table to the Notification 64/88 is concerned, the Supreme Court has held as extracted supra in the case of Mediwell Hospital. This has not been overruled by the later Bench. Hence there cannot be any doubt that the petitioners have to discharge their obligation mentioned in Clause 2 of the Notification 64/88, in order to enjoy the benefit of exemption of Customs Duty. 17.Now the question for consideration is whether the second respondent had arrived at the conclusion that the petitioners had not complied with the conditions specified in Clause 2 of the said Notification either with any material or after verifying such material with the petitioners. 18.As per Clause 1 of the notification, the conditions to be complied with are as follows : (i) the import of the equipment has to be approved either generally or in each case by the Government of India in the Ministry of Health and Family Welfare, or by the Directorate General of Health Services to the Government of India, as essential for t....
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....d more details. The petitioners conducted the health care camp free of cost and that has not been taken into consideration in connection with the free service to at least 40% of the outdoor patients. So far as the reservation of 10% of the hospital beds for giving free treatment to all indoor patients belonging to families with an income of less than Rs. 500/- p.m. is concerned, it is contended that even though there is no specific reservation of beds had been made, the management of the hospitals made sufficient provisions for the free treatment of those who fall under the said category. These aspects had not been taken into consideration either by the Visiting Committee or by the second respondent, Director General of Health Services. Before ever the Report of the Visiting Committee was accepted, had the petitioners been given an opportunity by the second respondent, Director General of Health Services, the petitioners could have furnished all the details to convince the second respondent with regard to the compliance or the satisfaction of the conditions under Clause 2 of the Table to the notification. 22.The learned Additional Solicitor General vehemently contended that the ....
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....t strictly 40% of the outdoor patients have to be treated freely. Sometimes it may depend upon the availability of the patients. If no patient who is entitled for such free treatment comes to the hospital, the management of the hospital cannot be blamed for non-compliance of the said condition. 26.Similarly with regard to Clause (b) that reservation of 10% of the hospital beds for giving free treatment to the indoor patients belonging to the families with an income of less than Rs. 500/- p.m., is concerned, one has to take the pragmatic view. When the hospitals are in existence to provide the immediate medical aid, the reservation of 10% for particular category cannot be expected to be followed mechanically. It has to be considered on facts as to whether any one who falls within that category had been refused the necessary medical aid or refused to be admitted in the hospital. The mechanical reservation of 10% of the beds may lead to an anomaly that sometimes the beds have to be kept vacant because of the non-availability of the particular category of families. If this procedure is to be adopted, then the other patients who are in immediate need of the medical aid will be depriv....
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....certificate to the effect that they treat all the patients referred to them by the Government Institutions free of cost. Only on this basis, the certificates were also issued. 28.In fact, this is very clear from the judgment of the Supreme Court in Mediwell Hospital case where in paragraph 14 the learned Judges have said as follows : "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 are made by the indigent persons, on denial of such treatment in the hospital concerned or diagnostic centres, as the case may be." 29.From the above discussion, it is clear that it is open to the authorities to take action as and when any complaint is received from those who had not been provided the medical aid as contemplated under these conditions. In fact the Supreme Court has taken into consideration of the practical aspect of the case and observed so. When that be the case, the action of the second respondent Director General of Health Serv....
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.... Certificate, the Director General of Health Services has to accept the same. However, if the second respondent wants to reject the same, it is for the second respondent, the Director General of Health Services, New Delhi to give the reasons therefor after affording an opportunity to the persons concerned to rebut the charges, if any. Moreover, when the recommendation had been made by the appropriate authority of the State Government at an earlier point of time and the Report of the inspecting authorities being subsequent one and that too the gap between two events being enormous one, this Court is of the view that it is not appropriate for the Director General of Health Services, New Delhi to reject the recommendation of the appropriate authority of the State Government summarily. The Director General of Health Services, New Delhi ought to have taken note of the fact that the recommendation of the appropriate authority of the State Government is with regard to the relevant period. Hence the rejection of the recommendation of the appropriate authority of the State Government by the Director General of Health Services cannot be sustained on this ground also the order of cancellation....
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....able to discharge the obligations contemplated under the said Notification 64/88. Since the Apex Court in the Mediwell Hospital case [1997 (89) E.L.T. 425 (S.C.) = (1997) 1 SCC 759] held that the obligation being a continuous one, it is always open to the authorities to take action against the petitioners for the violation of such conditions. Hence the impugned proceedings are quite valid. 35.While considering this question, it is worthwhile to refer the two judgments of the Supreme Court. In the case of State of Orissa v. Titaghur Paper Mills Co. Ltd - (1985) Supp. SCC 280 it has been held as follows : "Yet another contention raised by the contesting respondents with respect to the impugned provisions was that the two notifications dated December 29, 1977, having been made in "supersession" of all previous notifications issued on the subject, the effect was to wipe out all tax liability which had accrued under the notifications dated May 23, 1977. The High Court held that to hold that the liability was so wiped out would amount to giving a retrospective effect to the notification dated December 29, 1977, and as the Legislature had not conferred upon the State Government the ....
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....d". Some of the meanings given to the word 'supersede' on the same page in that dictionary which are relevant for our purpose are "to put a stop to; to render superfluous or unnecessary; to make of no effect; to annul; to take the place of (something set aside or abandoned); to succeed to the place occupied by; to supply the place of a thing". Webster's Third New International Dictionary at page 2296 defines the word "supersession"as the "the state of being superseded; removal and replacement". Thus, by using in the notifications dated December 29, 1977, the expression "in supersession of all previous notifications" all that was done was to repeal and replace the previous notifications by new notifications. By repealing and replacing the previous notifications by other notifications, the result was not to wipe out any liability accrued under the previous notifications. If this contention of the respondents were to be accepted, the result would be startling. It would mean, for example, that when a notification has been issued under Section 5(1) prescribing a rate of tax, and that notification is later superseded by another notification further enhancing the rate of tax, all tax liab....
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.... the repeal of statute is a right acquired or accrued under it. 40.Similarly sub-section (c) of Section 6 preserves rights and privileges acquired and accrued on the one side and the corresponding obligation and liability incurred on the other side so that if no right had accrued under the repeal statute, there is no question of any liability being preserved. 41.If this is taken into consideration along with the principles laid down by the Apex Court in the above cases, it is clear that the benefits acquired or accrued by the petitioners cannot be taken away such as the certificate issued already cannot be cancelled. 42.However, the question remains for consideration is whether the liability arising out of such extended benefit can be enforced or not, or in other words whether the penal action of cancelling the certificate can be made or not, when the petitioners failed to discharge the obligations arising out of the rescinded notification. 43.Having derived such exemption whether it is open to the petitioners to contend that after the rescinding of Notification No. 64/88, it is not open to the authorities to enforce the liability. The answer is simple, in view of the j....
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....hat of the petitioners. In fact, in the said case, a group of persons called 'C' and 'D' employees claimed special duty allowance. In an earlier writ petition filed by those who are identically placed as the petitioners, the Apex Court has held that they are not entitled for such special duty allowances. The Apex Court held that the said judgment will be binding on the petitioners also and it is not open to the petitioners to contend that they were not parties to the earlier proceedings and they can not be permitted to raise new grounds to canvass the correctness of the judgment in that case. 48.On this principle, it is contended by the learned Additional Solicitor General that when the Apex Court has held in the Mediwell Hospital case [1997 (89) E.L.T. 425 (S.C.) = (1997) 1 SCC 759] that those who got CDEC have to discharge the obligation continuously, it is not open to the petitioners herein to contend that the Notification 64/88 had been rescinded and as such their obligation also ceases. 49.In my view, the above contention of the learned Additional Solicitor General cannot be countenanced. In the Mediwell Hospital case [1997 (89) E.L.T. 425 (S.C.) = (1997) 1 SCC 759] the ....