The Madurai Bench of the Madras High Court on Wednesday observed that
benefits conferred under Section 122 (e) of the Madurai City Municipal
Corporation Act were not automatic.

Hearing petitions filed by two
private hospitals seeking exemption from property tax, the court
directed them to pay one-third of the arrears to the corporation subject
to its final orders on exemption.

Justice R. Mahadevan, who heard
the petitions filed by Velammal Educational Trust and S. R Trust
(running the Meenakshi Mission Hospital and Research Centre) observed
that the hospitals were at liberty to make a representation to the
Madurai Corporation within six weeks to seek exemption. The corporation
shall pass appropriate orders after considering the representations and
conducting proper investigation of the premises. The daily rent charged
by the hospitals on patients shall also be considered, the court said.

Counsels
for the petitioners Niranjan S. Kumar and S. Ramesh argued that the
hospitals were entitled for exemption under Section 86 (e) of the Tamil
Nadu District Municipalities Act, 1920, and under Section 122 (e) of the
Madurai City Municipal Corporation Act as charitable hospitals and
dispensaries, excluding residential quarters, were exempted from
property tax. They argued that notices were sent to the hospitals
without giving them an opportunity to present their stance on exemption
from property tax.

Additional Advocate General B. Pugalendhi
argued that the hospitals were not run purely for charitable purposes
and charges were collected from patients. No evidence was provided by
them on the claims that the poor and needy were charged only nominal
fees.

Exemption under Section 80 G of the Income Tax Act by itself
would not entitle the petitioners to seek an exemption from property
tax. As the hospitals had rented out parts of their premises to run
canteens and were collecting parking fees for vehicles, they were not
automatically exempted from property tax, said the Additional Advocate
General.

The petitions were filed by the hospitals after the Corporation Commissioner sent notice asking them to pay property tax dues.