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Tax & Customs LawSupreme Court of India

SH Medical Centre Hospital v. State of Kerala & Others

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 665 of 2014)Decided 16 Jan 2014
Civil Appeal No. 665 of 2014
Justice Sudhansu Jyoti Mukhopadhaya · Justice V. Gopala Gowda

Background

A hospital run by a charitable religious society sought building-tax exemption for its premises in Kerala. It provided some free treatment and said its income served philanthropic purposes, but also charged paying patients. The authorities and High Court declined a blanket exemption because the buildings' principal charitable use had not been adequately demonstrated.

Decision Breakdown

The Supreme Court dismissed the hospital's appeal and vacated its interim stay. The exemption depended on how the building was principally used, rather than merely the charitable objects of the owning society or its income-tax status. The hospital had not supplied sufficient evidence showing that the entire taxed area principally provided free medical relief to the poor. Buildings used for such free medical aid were to be exempt, but that did not justify exempting all hospital premises irrespective of their use.

Lesson Learnt

A charitable label or income-tax exemption does not automatically exempt every property from a different tax. For a use-based building exemption, the claimant must demonstrate the qualifying activities carried on in the premises concerned.

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