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Jaslok Hospital And Research Centre v. Union Of India And Others
Factual and Procedural Background
The appellant, a hospital, imported various medical equipments between 1988 and 1994 under Customs Notification No. 64/88-Cus. dated 1-3-1988 after obtaining Customs Duty Exemption Certificates (CDECs) from the Directorate General of Health Services (DGHS). The certificates were issued on the premise that the hospital fell under Paragraph 2 of the notification’s table, which required, inter alia, free treatment to 40 % of outdoor patients and all indoor patients with monthly family income below ₹500.
On 14-11-2000, DGHS cancelled/withdrew all CDECs on the ground that the hospital had failed to comply with those Paragraph 2 conditions. Nearly three years later, on 24-9-2003, the hospital submitted a representation to the Ministry of Health & Family Welfare seeking re-classification under Paragraph 1 of the same notification (meant for hospitals run or substantially aided by an approved charitable organisation). DGHS rejected this request on 18-3-2004.
The appellant filed Writ Petition No. 2613 of 2004 before the Bombay High Court challenging (i) the cancellation order dated 14-11-2000 and (ii) the refusal to re-classify dated 18-3-2004. During argument, the appellant abandoned the challenge to the cancellation and pressed only the re-classification issue. The High Court dismissed the writ petition on 17-12-2004. A subsequent writ petition (No. 5594 of 2006) met the same fate on 21-9-2006, the High Court again relying on its earlier decision.
The present Civil Appeal No. 7284 of 2005 and the appeal arising out of SLP(C) No. 17577 of 2006 were filed before the Supreme Court, both raising the identical question regarding the entitlement to change of category.
Legal Issues Presented
- Whether a hospital whose CDECs have been withdrawn for non-compliance with Paragraph 2 conditions of Notification 64/88-Cus. can subsequently seek and obtain re-classification under Paragraph 1 of the same notification.
- Whether DGHS acted legally in rejecting the appellant’s representation for re-classification made three to four years after withdrawal of the exemption.
Arguments of the Parties
Appellant's Arguments
- The appellant was entitled to shift from Paragraph 2 to Paragraph 1 of the notification notwithstanding the earlier withdrawal of exemption.
- Reliance was placed on Share Medical Care v. Union of India (2007 4 SCC 573), wherein this Court held that when an applicant qualifies for more than one category of exemption, the authority must grant the most beneficial one and a previous withdrawal under another category cannot bar such a claim.
The opinion does not contain a detailed account of the respondents' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Share Medical Care v. Union of India, (2007) 4 SCC 573 | An applicant entitled to benefit under multiple categories or notifications may claim the most advantageous one; earlier withdrawal under another category is no bar. | The Court acknowledged the precedent but declined to examine its applicability because it found the appellant’s claim barred on factual and temporal grounds. |
Court's Reasoning and Analysis
1. The Supreme Court noted that the appellant had expressly abandoned its challenge to the 14-11-2000 communication withdrawing the CDECs. Consequently, from that date the appellant was no longer entitled to any exemption under the notification.
2. A change of category could have relevance only while the CDECs were subsisting. Once they were cancelled, the basis for seeking re-classification ceased to exist.
3. The representation seeking re-classification was made three years (and, in the second matter, four years) after withdrawal of the exemption. The Court characterised this delay as an “afterthought” and found no justification for entertaining such a belated request.
4. Given these facts, the Court found that DGHS’s rejection was not based on irrelevant or extraneous considerations and that the High Court rightly upheld the administrative decision.
5. In light of the above findings, the Court considered it unnecessary to delve into the precedent of Share Medical Care or its potential applicability.
Holding and Implications
Civil Appeal No. 7284 of 2005 and the appeal arising out of SLP(C) No. 17577 of 2006 are DISMISSED.
Immediate consequence: the appellant’s request for re-classification under Paragraph 1 is finally rejected, and the withdrawal of its customs duty exemptions stands undisturbed. The judgment turns on the specific chronology and conduct of the appellant; no new legal principle is announced beyond reaffirming the discretionary limits on entertaining stale representations.
Ashok Bhan, J.— Leave granted in Special Leave Petition No. 17577 of 2006.
2. This judgment shall dispose of Civil Appeal No. 7284 of 2005 and the civil appeal arising out of SLP (C) No. 17577 of 2006.
3. CA No. 7284 of 2005 is directed against the judgment and order passed by the High Court of Judicature at Bombay in CWP No. 2613 of 2004 dated 17-12-2004 whereby the High Court has dismissed the writ petition filed by the appellant.
4. The civil appeal arising out of SLP (C) No. 17577 is directed against the order dated 21-9-2006 passed by the same High Court in Writ Petition No. 5594 of 2006.
5. The latter case has been dismissed by the High Court on the basis of the findings recorded in the order dated 17-12-2004 passed in WP No. 2613 of 2004, Jaslok Hospital and Research Centre v. Union of India.
6. As the point involved in both the appeals is identical, the appeals are taken up for disposal together by this common judgment.
7. For the convenience of reference, the facts are taken from CA No. 7284 of 2005.
8. The appellant obtained customs duty exemption certificate (for short “CDEC”), from the Directorate General of Health Services (DGHS), for import of various hospital equipments under Notification No. 64/88-Cus. dated 1-3-1988 (for short “the notification”). CDECs issued to the appellant relate to import of medical equipments for the period between 1988 and 1994. CDECs certified that the appellant was covered under Para 2 of the table annexed to the notification. The same reads as under:
“Table
1. All such hospitals as may be certified by the said Ministry of Health and Family Welfare, to be run or substantially aided by such charitable organisation as may be approved, from time to time, by the said Ministry of Health and Family Welfare.
2. All such hospitals which may be certified by the said Ministry of Health and Family Welfare, in each case, to be run for providing medical, surgical or diagnostic treatment not only without any distinction of caste, creed, race, religion or language but also,—
(a) free, on an average, to at least 40 per cent of all their outdoor patients; and
(b) free to all indoor patients belonging to families with an income of less than rupees five hundred per month, and keeping for this purpose at least 10 per cent of all the hospital beds reserved for such patients; and
(c) at reasonable charges, either on the basis of the income of the patients concerned or otherwise, to patients other than those specified in Clauses (a) and (b).”
9. The said CDECs were cancelled/withdrawn by the Directorate General of Health Services (DGHS) vide its communication bearing No. Z.37024/13/92-MG dated 14-11-2000 addressed to the Chief Executive Director of the appellant, on the ground that the appellant Hospital had failed to comply with the conditions laid down in Para 2 of the table annexed to the notification extracted above.
10. After about three years, the appellant made a representation to the Secretary, Ministry of Health and Family Welfare on 24-9-2003, seeking categorisation under Para 1 (extracted below) instead of Para 2 of the table annexed to the notification:
“1. All such hospitals as may be certified by the said Ministry of Health and Family Welfare, to be run or substantially aided by such charitable organisation as may be approved, from time to time, by the said Ministry of Health and Family Welfare.”
The said representation came to be rejected by DGHS vide its order dated 18-3-2004.
11. Against the rejection of its aforesaid representation, the appellant filed the writ petition in the High Court, challenging the communication dated 14-11-2000 issued by DGHS, cancelling/withdrawing CDECs granted to the appellant, and the order dated 18-3-2004, declining to categorise the appellant under Para 1 of the table annexed to the notification. During the course of hearing before the High Court, counsel for the appellant did not press the prayer for setting aside the communication dated 14-11-2000 and confined the challenge only to the order dated 18-3-2004 passed by DGHS.
12. Till the year 2003, the appellant accepted and was rather satisfied of its being categorised under Para 2 of the table annexed to the notification. It was only after the withdrawal/cancellation of the said CDECs by the communication dated 14-11-2000 and, that too, after a lapse of almost three years, that the appellant made a representation to the Secretary to the Ministry of Health and Family Welfare for being categorised under Para 1 of the table annexed to the notification.
13. The representation of the appellant, as stated above, was rejected by DGHS on the ground that the State Government had recommended the appellant's case only under Para 2 of the table annexed to the notification which, inter alia, stipulates that the hospital has to provide free treatment to 40 per cent of the outdoor patients and to all indoor patients whose income is less than Rs 500 per month.
14. The High Court, by the impugned order, has upheld the order passed by DGHS. It has been held that the order passed by DGHS is not based on irrelevant or extraneous considerations. That the appellant could not claim change in the categorisation after having enjoyed the benefit under Para 2 of the table annexed to the notification for about fifteen years. During the said period of fifteen years, the appellant did not raise any grievance with regard to its non-categorisation under Para 1 of the said table and its categorisation under Para 2 thereof.
15. Counsel for the appellant contends that the appellant was entitled to claim change in the categorisation and DGHS has erred in holding that the appellant was not entitled to claim change in its categorisation from Para 2 to Para 1 of the table annexed to the notification. In support of his submission, the learned counsel had relied upon a judgment of this Court in Share Medical Care v. Union of India (2007) 4 SCC 573 wherein it has been held thus:
“16. In the instant case, the ground which weighed with the Deputy Director General (Medical), DGHS for non-considering the prayer of the appellant was that earlier, exemption was sought under Category 2 of exemption notification, not under Category 3 of exemption notification and exemption under Category 2 was withdrawn. This is hardly a ground sustainable in law. On the contrary, well-settled law is that in case the applicant is entitled to benefit under two different notifications or under two different heads, he can claim more benefit and it is the duty of the authorities to grant such benefits if the applicant is otherwise entitled to such benefit. Therefore, non-consideration on the part of the Deputy Director General (Medical), DGHS of the prayer of the appellant in claiming exemption under Category 3 of the notification is illegal and improper. The prayer ought to have been considered and decided on merits. Grant of exemption under Category 2 of the notification or withdrawal of the said benefit cannot come in the way of the applicant in claiming exemption under Category 3 if the conditions laid down thereunder have been fulfilled. The High Court also committed the same error and hence the order of the High Court also suffers from the same infirmity and is liable to be set aside.”
(emphasis in original)
16. Without going into the question regarding applicability or otherwise of the decision referred to above, we are of the view that the appellant is not entitled to the relief sought for. The appellant had given up its challenge to the communication dated 14-11-2000 cancelling/withdrawing CDECs issued to the appellant for having violated the conditions laid down for grant of exemption. The effect of the communication dated 14-11-2000 is that the appellant is not entitled to the exemption under any of the clauses of the aforesaid notification on or after 14-11-2000. The representation made by the appellant after a lapse of three years of the cancellation/withdrawal of CDECs cannot be entertained, as the change of its category would not arise as the appellant's categorisation under Para 2 of the table annexed to the notification had already been withdrawn. Such a change could only be possible if the appellant had applied for change of its categorisation before the issuance of the communication of DGHS dated 14-11-2000 withdrawing/cancelling CDECs.
17. Apart from this, the change of categorisation was sought after a lapse of three years of the withdrawal/cancellation of CDECs. Such a representation could not be entertained after a lapse of three years at the sweet will of the appellant. The representation filed by the appellant in 2003, seeking change of category from Para 2 to Para 1 of the table annexed to the notification, is clearly an afterthought in order to overcome the failure on the part of the appellant to comply with the conditions laid down in Para 2 of the table annexed to the notification. The same could not be entertained after such a lapse of three years of the communication dated 14-11-2000.
18. In the appeal arising out of SLP (C) No. 17577 of 2006, the representation was filed after a lapse of four years of the withdrawal/cancellation of CDECs, which, as held in the preceding paragraphs, could not have been entertained and the High Court has rightly upheld the order of rejection of the change of categorisation.
19. For the reasons stated above, we are not inclined to interfere with the orders passed by the High Court. The civil appeals are, therefore, dismissed with no order as to costs.
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