“Hospital Buildings will get exemption from Building Tax under the head ‘Charity’ only If free Medical Service is rendered”: Kerala HC [Read Judgment]


The division bench of the Kerala High Court in a recent ruling held that the hospital buildings are entitled to exemption from Building Tax subject to the provisions of section 3 of the Building Tax Act.

The division bench comprising of Justice Antony Dominic and Justice Dama Sheshadiri Naidu observed that under the said provision, the said building will get exemption under the head “charity” only if it is proved that the assesses are providing free medical service in the hospital. If such service is rendered by receiving payment, the exemption cannot be availed. 

The grievance of the appellant, M/s Quilon Medical Trust, was that, the Government through its order, denied to grant exemption from payment of building tax due under the Building Tax Act, 1975 in respect of buildings such as hospital, canteen, incinerator and the mortuary, apart from the doctors quarters.

Earlier, the Court by the judgment under appeal dismissed the writ petition filed by the assesse relying on the Full Bench judgment of the same court in Unity Hospital(P) Ltd. v. State of Kerala [2011 (1) KLT 236] and the Division Bench judgment in Jubilee Mission Medical College and Research Institute v.Government of Kerala [2011 (4) KLT 106]. Being aggrieved, the appellant filed the present appeal claiming that the appellant is entitled to exemption in respect of the aforesaid buildings under Section 3 of the Building Tax Act.

The Court found that nothing in the Act shall apply to buildings used principally for religious, charitable or educational purposes or as factories or workshops. According to the Court, the explanation to the Section provides that for the purposes of this sub-section, “charitable purpose” includes relief of the poor and free medical relief.

The Court noticed that decision in Unity Hospital(P) Ltd. v. State of Kerala in which it was observed by the Full Bench that hostel attached to nursing schools and other medical institutions which require compulsory hostel facility for students for their approval are entitled to exemption. However, the Court took a view that hospital buildings will get exemption under the head ‘charity’ only if free medical service is rendered in such buildings.The above decision was followed the division bench in the case of Jubilee Mission Medical College and Research Institute v.Government of Kerala. 

Following the above decisions, the Court held that “Therefore, hospital attached to a medical college as in the case of the appellant would qualify for exemption only if, it satisfies the aforesaid requirements of Section 3(b). The fact that the hospital is attached to a medical college would not improve the case unless those requirements are satisfied. Insofar as this case is concerned, the appellant has no case that medical service is rendered free in the hospital. Therefore, this case is fully covered against the judgment in Jubilee Mission Medical College’s case(supra). Therefore, we do not find any illegality in the conclusions of the learned Single Judge justifying interference.”

Read the full text of the Judgment below.