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Jan 25, 2009

MHC Directed The Kalapatti Panchayat To Refund The Property Tax

A charitable institution, such as an hospital, need not pay property tax to the local body concerned, the Madras High Court has held. Justice K Chandru, allowing a writ petition of Aravind Eye Hospital at Kalapatti in Coimbatore on Friday, also directed the panchayat to refund the property tax collected from the trust running the hospital. The matter relates demand notices and reminders issued by the Kalapatty town panchayat to Govel Trust running Aravind Eye Hospital

After the failure of writ petitions, appeals and special leave petitions against property tax assessment notices of the local body, the trust had paid over Rs 50 lakh in three instalments as interim compliance. On Friday, Justice Chandru pointed out that the trust was entitled to tax exemption under Section 86(e) of the Tamil Nadu District Municipalities Act. Noting that the trust's hospitals in Madurai and Tirunelveli too were exempted from tax, the judge set aside the demand notice as well as the resolution of the local body in April 1999. As the hospital is not liable to pay property tax, the town panchayat must refund the amount collected from the trust, he added.

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