IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOTTATHIL B.RADHAKRISHNAN FRIDAY, THE 18TH MARCH 2011 / 27TH PHALGUNA 1932 WP(C).No. 417 of 2004(Y) --------------------------------- PETITIONER(S): -------------------- ST.JOSEPH HOSPITAL, ANCHAL, KOLLAM, REPRESENTED BY ITS ADMINISTRATOR. . BY ADV. SRI.SIBY MATHEW SRI.PHILIP J.VETTICKATTU RESPONDENT(S): ---------------------- 1. STATE OF KERALA, REPRESENTED BY THE SECRETARY,LOCAL ADMINISTRATION, GOVERNMENT SECRETARIAT, TRIVANDRUM. 2. THE ANCHAL GRAMA PANCHAYAT, ANCHAL P.O., KOLLAM, REPRESENTED BY ITS SECRETARY. ADV. SRI.C.J.JOY FOR R2 SRI.V.K.PRAVEEN FOR R2 GOVERNMENT PLEADERSRI.V.MANU FOR R1 SRI.S.RAMESH BABU,S.C,KOCHI CORPN. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 18/03/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).417 OF 2004. APPENDIX PETITIONER'S EXHIBITS: EXHIBIT P1: COPY OF CERTIFICATE DATED 30.3.1999 ISSUED BY THE DISTRICT MEDICAL OFFICER OF HEALTH, KOLLAM TO THE PETITIONER. EXHIBIT P2 SERIES: COPY OF CERTIFICATES DATED 2.3.1985 & 18.1.1993 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. EXHIBIT P3: COPY OF GOVERNMENT ORDER DATED 14.2.1972. EXHIBIT P4: COPY OF REGISTRATION CERTIFICATE DATED 7.10.1992 ISSUED UNDER aCT xii OF 1955. EXHIBIT P5: COPY OF TRUST DEED DATED 23.5.2001. EXHIBIT P6: COPY OF LETTER DATED 31.3.1995 ISSUED BY THE ASSISTANT COMMISSIONER OF INCOME TAX TO THE PETITIONER. EXHIBIT P7: COPY OF AUDITOR'S REPORT OF THE PETITIONER HOSPITAL FOR THE YEAR 2001-2002. EXHIBIT P8: COPYOF BILL DATED 25.3.2002 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. EXHIBIT P9: COPY OF BILL DATED 25.3.2002 ISSUEDBY THE 2ND RESPONDENT TO THE PETITIONER. EXHIBIT P10: COPY OF REPRESENTATION DATED 12.9.2002 SUBMITTED BY THE PETITIONER BEFORE THE 1ST RESPONDENT. EXHIBIT P11: COPY OF JUDGMENT DATED 20.3.2003 IN O.P.NO.29086/2002 PASSED BY THIS HONOURABLE COURT. EXHIBIT P12: COPY OF ORDER DATED 29.9.2003 ISSUED BY THE 1ST RESPONDENT. RESPONDENTS' EXHIBITS: EXHIBIT R2(a): COPY OF LETTER DATED 17.1.2002 SUBMITTED BY THE PETITIONER TO THE PANCHAYATH. EXHIBIT R2(b): COPY OF REPRESENTATION DATED 25.3.2002 SUBMITTED BY THE PETITIONER TO THE PANCHAYATH. /TRUE COPY/ PS TO JUDGE THOTTATHIL B.RADHAKRISHNAN, J. ---------------------------------------------- W.P(C).No.417 of 2004 ---------------------------------------------- Dated this the 18th day of March, 2011 JUDGMENT Exhibit P12 order of the Government refusing to grant exemption to the establishment of the petitioner from payment of property tax under the provisions of the Kerala Panchayat Raj Act, 1994 is under challenge. 2. While petitioner points out Exhibit P3, to say, that it had an exemption under the Kerala Panchayats Act, 1960, it needs to be said that Exhibit P3 order of exemption was only one finding that the establishment was eligible to statutory exemption in terms of Section 72 (1)(f) of the 1960 Act. With the coming into force of the 1994 Act, the specific provision for exemption from tax for charitable hospitals and dispensaries as was available under Section 72(1)(f) of the 1960 Act is not included as a specific entry of an exemption under Section 207(1) of the 1994 Act. Yet, the sweep of the power under Section 207(2) of the 1994 Act is same as that of Section 72(2) of the 1960 Act, which provisions are in para materia. Therefore, the power of the Government to grant exemption to any person or class of person wholly or in part from the payment of any tax continues to exist. WP(C) No.417/04 - 2 - 3. While the petitioner may indicate, based on ground 8 of the Writ Petition, that there is an unguided power of exemption granted under Section 207(2) of the 1992Act to the Government, it is not necessary to express on that aspect of the matter in this case. The power of exemption is conferred statutorily on the Government, which is a high repository of executive power. Higher the authority, larger the power; greater shall be the requirement for restraint. But, the power to exempt in situations which require its exercise cannot also be excluded. 4. Be that as it may, in so far as the petitioner's case is concerned, the impugned Exhibit P12 order has been issued on two grounds. Firstly, it proceeds to state that the petitioner is not a charitable institution, going by its balance sheet. Secondly, the Government says in the impugned order that the petitioner, not having filed an appeal against an assessment order or a first appellate order therefrom, the right to claim exemption may not be available. 5. The second among the aforesaid is mentioned only to be overruled outright. When exemption is granted under Section 207 (2), it is the primary and original power of the Government that is invoked. It does not depend on how a different authority under the Kerala Panchayat Raj Act had decided on any particular assessment. An order of exemption may be one that would enable the assessee WP(C) No.417/04 - 3 - under a fiscal legislation to get over the effect of assessment orders and demands following assessments. 6. In so far as the first limb of the reasoning in Exhibit P12 is concerned, a perusal of the balance sheet does not appear to have been properly done. If Exhibit P7 is the balance sheet, then, it apparently tends to reflect the details in Exhibit R2(a) available with the Grama Panchayat. The earnings of such an establishment has to be assessed on two grounds and yardsticks. It will not be out of place to indicate that decisions rendered by this Court and the Apex Court and in other jurisdiction on provisions contained in Section 72 (1)(f) of the 1960 Act and provisions in para materia thereto may provide some useful guidance, though the power of exemption under Section 207(2) of the 1994 Act is left to be exercised at the wisdom of the repository of that power. The indication of law and justice in the context is that when exemption is claimed on particular fact situation, it may be appropriate to look into the scope of granting such exemption with reference to the fact situation and legal issues contained in precedents laid down by Courts which also form part of the law laid, as of the land. In that view of the matter, the decision of the Apex Court in Fr.Thomas Panjikkaran v. Chalakkudi Municipality (2004(2) ILR 195 Kerala), Commissioner of Income Tax, Andhra Pradesh, Hyderabad v. Andhra Pradesh State Road Transport Corporation, WP(C) No.417/04 - 4 - Hyderabad ( (1986)2 SCC 391), Additional Commissioner of Income-tax, Gujarat, Ahmedabad v. Surat Art Silk Cloth Manufacturers' Association, Surat (AIR 1980 SC 387), and of this Court in Mercy (Sr.) (Dr.) v. Secretary to Government of Kerala and Another (2011(1) KHC 769) Good Shephered Hospital Soecity v. Executive Officer, Vayithiri Panchayat and ors. (1973 KLT 348), Fr. Paul v. executive Officer, Kalloorkad Panchayat (1974 KLT 289), Medical Trust Hospital v. State of Kerala (2004 KHC 1072), Medical Trust Hospital v. State of Kerala (2004 KHC 556), State of Kerala v. St. Gregorious Medical Mission (1992(1) KLT 230), may throw abundant light on the relevant principles of law, though some of them may have been rendered in connection with the provisions of the Kerala Building Tax Act, 1975. 7. In the light of the aforesaid discussions, the impugned Exhibit P12 order is vitiated for not having been rendered, considering all facts and figures relevant for such decision, in the context of the statutory provision, namely, Section 207(2) of the Kerala Panchayat Raj Act, 1994. In the result, Exhibit P12 is quashed and the Government are directed to take up the request of the petitioner and decide on it de novo, if necessary, after calling for further materials and making such further enquiry as may be necessary. The petitioner and the WP(C) No.417/04 - 5 - Grama Panchayat will be heard in relation to the matter and a decision will be issued within an outer limit of six months from the date of receipt of a copy of this judgment. Until then, following the interim order already granted, recovery of property tax from the petitioner will stand stayed. The Writ Petition is ordered of as above. The parties are directed to suffer their costs. THOTTATHIL B.RADHAKRISHNAN, JUDGE vgs