The Madras High Court on Wednesday ruled that exemption from payment of property tax, water tax, sewerage charges and the like must be given only to institutions which predominantly serve the poor and not to hospitals which predominantly provide their services to the rich and affluent on collection of hefty amounts of money. The court held that only a hospital which provides free access to the poor and does not deny admission to them could be termed as a charitable institution.
Justice S.M. Subramaniam passed the ruling while dismissing two writ petitions filed by Sundaram Medical Foundation, which runs Dr. Rangarajan Memorial Hospital on 2,542 sq m of land allotted to it by the State government at Shanthi Colony in Anna Nagar in April 1992. The present petitions had been filed in 2018 against demand for property tax and other charges by the Greater Chennai Corporation (GCC) and the Chennai Metro Water Supply and Sewerage Board (CMWSSB).
The judge said the institution was started with the avowed object of offering services free of cost to the poor and at concessional rates to others. However, now, it had turned into a super speciality hospital and an inspection by the GCC officials found that the hospital was charging equivalent to other private hospitals in the city.
The Corporation also claimed that the hospital itself admitted that it was providing its services free of cost only to 15% of the patients.
After recording the submission, the judge said an institution which was charging heavy amount of money from 85% of its patients could not be termed as a charitable institution entitled to tax exemptions.
‘An exception’
“Payment of property tax is the law… Application for exemption is a right. Granting exemption is a concession and grant of exemption must be an exception. Such grant of exemption should also be strictly in consonance with the provisions of the statutes,” he observed.
Justice Subramaniam went on to state: “We, the people of India, are generous in recognising and appreciating charitable institutions. However, for the purpose of granting exemption from payment of tax, charity should be established to such an extent so as to form an opinion that the access to the poor, needy and deserving for treatment are not only provided but they are allowed to get admission without any restrictions or hindrance.”
