Kriti Agrawal
On Wednesday, the Madras High Court held that exemption from payment of property tax, water tax, sewerage charges, and the like should be granted only to hospitals that primarily serve the needy, rather than hospitals that primarily serve the rich and affluent in exchange for lumpsum amount of money.
The court decided that only a hospital that offers free access to the poor and does not refuse their admission should be considered a charitable organization.
The ruling was issued by Justice S.M. Subramaniam while dismissing two writ petitions filed by Sundaram Medical Foundation, which operates Dr. Rangarajan Memorial Hospital on 2,542 square meters of land allotted to it by the State government in Shanthi Colony in Anna Nagar in April 1992.
The current petitions were filed in 2018 in response to the Greater Chennai Corporation (GCC) and the Chennai Metro Water Supply and Sewerage Board (CMWSSB)’s demand for property tax and other charges.
According to the judge, the hospital was established with the stated goal of providing services free of charge to the poor and at reduced rates to others.
However, it had now evolved into a super specialty hospital, and an investigation by GCC officials revealed that the hospital was charging rates comparable to other private hospitals in the city.
The Corporation also said that the hospital acknowledged that it was only offering free care to 15% of its patients.
After hearing the submission, the judge ruled that an organization that charged a high fee to 85 percent of its patients should not be considered a charitable institution eligible for tax breaks.
Further he pointed out that, “It is the rule to pay property taxes… Exemption applications are a legal right. Granting exemption is a concession, and it must be an exception. Such exemption should also be solely in accordance with the terms of the statutes.”
Justice Subramaniam stated that. “We, the people of India, are generous in recognizing 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.”
