Punjab-Haryana High Court
Mediwall Hospital And Health Care Pvt. ... vs Union Of India (Uoi) And Ors. on 31 January, 1996
Equivalent citations: 1997(57)ECC60, (1996)113PLR250
Author: S.C. Datta
Bench: S.C. Datta
JUDGMENT Jawahar Lal Gupta, J.
1. The petitioner's request for the grant of Custom Duty Exemption Certificate having been declined by the Director General of Health Services (Respondent No. 2), it has approached this court through the present writ petition. It prays that the order, dated December 26, 1994, a copy of which has been produced as Annexure P.6 with he writ petition, be quashed and the respondents be directed to grant the Exemption Certificate. A few facts as are necessary for the disposal of the case may be noticed.
2. In June 1992, the petitioner started work towards the setting up of a Cardiac Diagnostic Centre at Chandigarh. The equipment for Stress Test System, Colour Doppler and Holter Monitor Recorder was to be installed. Since this equipment was required to be imported, the petitioner submitted an application for the grant of custom Duty Exemption Certificate under the provisions of the Notification dated March 1, 1988, issued by the Ministry of Finance, Department of Revenue, Government of India, A copy of this notification is annexed as Annexure P.1 with the writ petition. On June 20, 1992, the petitioner submitted an application for the grant of Exemption Certificate. A copy of the application has been produced as Annexure P.2 with the writ petition. In this application, the details of the equipment to be imported were given. This application was duly scrutinised. Vide letter dated February 2, 1993, a copy of which has been produced as Annexure P.3 with the writ petition, the Custom Duty Exemption Certificate was given to the petitioner.
3. A perusal of the application submitted by the petitioner shows that while giving the description of the equipment to be imported, one of the items mentioned was "Marquette Max Monitor, EKG & Treadmill & All accessories". The Exemption Certificate was granted for the import of Marquette Max 1. A photo copy of the actual Certificate granted to the petitioner was produced at the time of hearing of the case. It is taken on record as Mark 'A'. However, instead of importing Marquette Max 1, the petitioner imported the equipment known as Marquette Case 15. Consequently, the petitioner wrote to respondent No. 2 that an amended Exemption certificate for the import of Marquette Case 15 be granted. It also approached respondent No. 3, the Director, Health Services, U.T. Chandigarh with a similar request. In the meantime, the equipment was received. The Collector of Customs (Imports) Air Cargo Unit, New Delhi, refused to release it without payment of duty. the petitioner submitted a Bond along with a Bank Guarantee on March 22, 1993. Thereafter, the equipment was released. Since the amended Exemption Certificate with regard to the import of Marquette Case 15 was not issued, the petitioner approached this court through Civil Writ Petition No. 10717 of 1993 seeking a writ of Mandamus directing the respondents to grant the amended certificate. After hearing both sides, the Bench disposed of the writ petition by its order dated February 16, 1994. The petitioner was called upon to submit an application with necessary documents to the respondents for consideration and decison. A copy of the order passed by the Bench has been produced by the petitioner as Annexure P.5 with the writ petition.
4. On August 12, 1994, respondent No. 3 recommended the petitioner's application to respondent No. 2. However, vide order, dated December 26, 1994 the petitioner's request for the grant of the amended Exemption Certificate was declined. A copy of this order is at Annexure P.6 with the writ petition. Aggrieved by this order, the petitioner has approached this court. It challenges the order on various grounds which shall be presently noticed. The petitioner prays that a writ of Mandamus directing respondent No. 2 to amend the original Exemption Certificate, be issued.
5. The respondents contest the petitioner's claim. A written statement has been filed on behalf of respondents 1 and 2 viz. the Union of India and the Director General of Health Services by Dr. B. Saikia, C.M.O. (Medical) Directorate General of Health Services, New Delhi. The issue of the original Certificate has been admitted. According to the respondents, the exemption certificate had been issued in accordance with the application submitted by the petitioner and the recommendation made by respondent No. 3. It has been further stated that on receipt of the recommendation with regard to the issue of an amended certificate, clarification was sought from respondent No. 3 vide letter dated Septen er 26, 1994. A copy of this letter has been produced as Annexure R. 3 with the written statement. The reply was received on November 20, 1994. The case was processed and final decision was taken. According to the respondents, the petitioner had "suppressed the material fact.' Accordingly, the petitioner was asked to return the Exemption Certificate already issued to it. The facilities provided by it "do not satisfy the criteria prescribed by the respondents for considering a request for CDEC in a given case." The petitioner's case is not covered under the Notification dated March 1, 1988. The respondents maintain that the petitioner does not fall within the ambit of a Hospital which may be eligible for the grant of Exemption Certificate "as it is not having any provisions for providing indoor treatment facilities." It has been further pointed out that the two beds installed in the centre are also for use in case of emergency and there are no other amenities for providing treatment to patients. It has been further pointed out that the position has been clarified by the Ministry of Finance vide letter dated November 17, 1993 to the effect that a diagnositc centre/Laboratory providing only "diagnostic treatment facilities" would not be entitled to the benefit of exemption as contemplated in the Notification dated March 1, 1988. A copy of the clarificatory letter has bee produced as Annexure R-V with the written statement. Various grounds raised by the petitioner have been controverted. On this basis, it is prayed that the writ petition may be dismissed.
6. The petitioner has filed a replication reiterating its stand and controverting the averments made by the respondents.
7. Mr. M.L. Sarin, learned counsel for the petitioner has contended that the petitioner-Institution falls within the expression 'Hospital' as contemplated in the notification dated March 1, 1988. It was on this basis that the Exemption Duty Certificate dated February 2, 1993 was issued by the respondents. That having happened, the respondents were not entitled to take the view that the petitioner-institution is not a Hospital or that it was not entitled to the grant of an Exemption Certificate. He has further contended that the respondents have passed the impugned order in violation of the directions given by the Division Bench vide order dated February 16, 1994 in as much as respondent No. 2 had placed reliance on material beyond the guidelines issued vide letter dated August 2, 1993. It has also been contended that respondent No. 2 was bound by the recommendation of respondent No. 3 and has erred in rejecting the recommendation by acting as an appellate authority. Lastly, it was submitted by the learned counsel that the action is barred by the principle of estoppel and cannot be sustained. The claim made on behalf of the petitioner was controverted by Mr. H.S. Giani, learned counsel for respondents No. 1, 2 and 4.
8. The two primary issues that arise for consideration are:-
(i) Is the petitioner running a Hospital or merely a diagnositic centre ?
(ii) Is the impugned order illegal and violative of the directions given by this Court ?
Reg. (i) A hospital in its ordinary sense is an Institution "for the reception and cure of sick, wounded, infirm or aged persons." It is a place where a person goes for treatment so as to "effect a cure of an injury or disease." As against this, a diagnositic centre is a place where "the art and act of identifying a disease fronrits signs or symptoms "is practiced. It is a place for investigation or analysis of cause or nature of a physical condition.
10. The Government by its circular dated March 1, 1988 had decided to grant exemption in respect of customs duty "to hospital equipments imported by specified category of hospitals" viz. 'Charitable' etc. It was necessary that such hospitals "be run for providing medical, surgical or diagnostic treatment. " It was essential to provide treatment and not merely to diagnose. Only then an Institution could qualify for the grant of exemption.
11. What is the position in the present case ? A perusal of application form submitted by the petitioner shows that it was proposing to set up a Cardiac unit "with all Cardiac Diagnostic facilities under the roof." It was further stated that the Centre is mainly diagnostic and "in-patient facility of two beds for emergency which will be totally free" was provided. It was also mentioned that the equipment is non-ivasive and gives a quick assessment of heart and blood vessels. A perusal of the application shows that the petitioner was setting up a diagnositic centre for assessment of heart and blood vessels and not a hospital for the cure of heart diseases.
12. It is true that a proper diagnosis is essential for an effective treatment. Without diagnosis, it may not be possible to treat. However, a Laboratory or a diagnositic centre where tests are performed for diagnosing the diseases may be an essential part of a hospital but not a place where the sick or the injured are given medical or surgical cure. Mr. Sarin was very emphatic in pointing out that even a centre providing diagnositic treatment is included in the expression 'Hospital'. It is undoubtedly correct that a hospital has been generally understood to include a "clinic and Maternity Home which renders medical, surgical or diagnositic treatment." However, provision of treatment is an essential pre-requisite. Radio diagnosis is distinct from radio therapy. Cancer may be detected by radio diagnosis but it is treated with radio thereapy. A centre which provides facility for detection only is not a hospital. However, another centre where the disease is not only diagonised but even treated would fall within the ambit of a hospital.lt can happen that a heart centre may not only perform angiography which is diagnositic but also angioplasty which is curative. If both the facilities are available at one centre, it would be a hospital providing diagnositic treatment.
13. So far as the petitioner is concerned, it is merely diagonising. It is not providing a facility for treatment. In this situation, it cannot be said that it is a hospital. Accordingly, the first question is answered in the negative. It is held that the petitioner is pot running a hospital but merely a diagnositic centre.
Reg:(ii)
14. Mr. Sarin submitted that in accordance with the directions issued by this court on February 16, 1994, the respondents had to consider the petitioner's application in accordance with the guidelines contained in annexure P.9 to the said petition The respondents have acted illegally in as much as the final decision is based on a subsequent clarification given by the Department of Revenue. Accordingly, it was contended that the impugned order is vitiated. The directions given by the Bench were in the following terms :-
"The petitioner shall submit the necessary application, complete in all respects, if it has already done so, within the next 10 days to the Director, Health Services, Union Territory, Chandigarh, Respondent No. 1. The Director, Health Services, Union Territory, Chandigarh, shall process the said application in terms of the guidelines, Annexure P-9 and specially paragraph 7 thereof, and forward the application with the requisite certificates after verifying the facts in terms of the guidelines within two weeks from the date of receipt of the application. Thereafter, the case will be processed by respondent No. 2. The case will be decided within 10 weeks from the date of receipt of the papers from respondent No. 3. The decision will be taken in accordance with law and till the decision is taken, the bank guarantee furnished by the petitioner shall not be encashed.
The writ petition is disposed of in these terms.
Sd/- A.P. Chowdhary February 16, 1994.
Sd/- P.K.Palli Judges"
15. A perusal of the above directions shows that the petitioner had to submit the application to the Director, Health Service, Union Territory, Chandigarh who had to process the application in terms of the quidelines with special reference to the stipulations in para 7. Thereafter, the case had to be processed by the competent authority. The final decision had to be "taken in accordance with law". On a perusal of these directions, we are unable to find any infirmity in the action of the respondents. Merely because the competent authority sought a clarification from the Department of Revenue, it cannot be said that its decision is vitiated. The direction was to decide the cases in accordance with law. In our view, the action of the respondents is in conformity with the orders passed by this court.
16. Irrespective of the above, we have examined the validity of the petitioner's claim for the grant of exemption, strictly in accordance with paragraph 7 of the quidelines. A copy of these quidelines has been produced as Annexure P-4 with the writ petition. It purports to be a letter from the Director General of Health Service, Nirman Bhawan, to different State authorities. It does not bear any date. The subject of "Hospital Equipment' has been considered in paragraph 6. With regard to the Grant of Exemption Certificate, the conditions are stipulated in para 6.3. Broadly, these are to be effect that the Institution provides - "treatment without distinction of caste, creed, race, religion or language... free treatment, on an average, to at last 40% of all their outdoor patients ... free indoor treatment to patients belonging to families with an income of less than Rs. 500/- per month and for this purpose... beds are reserved for them out of a total of... beds, which is at least 10% of its to all bed strength" and the treatment is at reasonable charges. Various other conditions are also stipulated. In case of hospitals, which are in the process of being established, an undertaking in terms of the conditions stipulated in para 6.3 (noticed above) has to be given.
17. Firstly, it is the admitted position that there are hardly any indoor facilities for patients. Provision of two beds is only for use in emergency. Secondly, we asked Mr. Sarin to show if there was any evidence that the petitioner was providing free treatment to outdoor patients. None has been produced. The question of showing that the beds were reserved for indoor patients did not arise. Consequently, even if the petitioner's case is examined solely on the basis of the criteria prescribed in the guidelines, it does not qualify for the grant of exemption certificate.
18. The purpose of granting exemption from the payment of Customs Duty is to encourage the Institutions to import sophisticated equipment which should be available not only for the elite but also for the common man. On a perusal of the guidelines, we find that the effort of the Government is to ensure that exemption is granted not merely to augment the commercial interest of the importer but in the larger interest of the public. In the present case, there is no evidence of the fact that the petitioner is conforming to the conditions stipulated in the guidelines. It appears to be a purely commercial venture, Consequently, there is no reason to justify the grant of exemption to the petitioner.
19. Accordingly, we answer the second question in the negative and hold that the impugned order is not in violation of the directions given by this court.
20. Mr. Sarin also submitted that the Director General of Health Services, Ministry of Health, was bound by the recommendation of the Director, Health Ser- vices, Chandigarh. The contention is wholly misconceived. Neither in principle nor in law, is there any warrant for this submission. The power to grant exemption has to be exercised by the competent authority. The recommendation has merely to be taken into consideration. It is not binding. We don't wish to say anything more especially with regard to the recommendation itself.
21. Lastly, it was contended that the impugned order is violative of the principles of natural justice and equitable estoppel.
22. It is true that whenever an order has civil consequences, it should be passed in accordance with the principles of natural justice. However, in the present case, we find that the claim for exemption can be made only by a hospital which provides the facilities of free treatment to a sizable section of the patients. In the present case, the petitioner is not running a hospital but merely a diagnositic centre. Furthermore, even the requirement of providing free facility to at least 40% of the outdoor patients is not being complied with. In this situation, the petitioner's claim for the grant of exemption was wholly unjustified. The authorities have not acted unfairly or illegally in declining it. In spite of being asked, the petitioner could produce no evidence to show that it was making its facilities available free of charge to atleast 40% of the patients. It is, thus, clear that the petitioner is engaged in a commercial venture. It is not entitled to the grant of exemption. The objection raised by the petitioner is purely technical. In the circumstances of the present case, even if we direct the respondents to redecide the matter after giving an op- portunity to the petitioner, it would be an exercise in futility.
23. In view of the above, we find no merit in this writ petition. It is, consequently, dismissed in limine. In the circumstances of the case, there will be no order as to costs.