MAULANA HOSPITAL Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner is a Multi Speciality Referral Hospital. It imported a Whole Body CT Scanner, availing duty exemption, granted under Exhibit P1 notification, on the strength of Exhibit F2 Customs Duty Exemption Certificate, issued by the Director General of Health Services The Scanner was imported in 1991. After a few-years, the Apex Court, in 1996, in Mediwell Hospital and Health Care Pvt. Ltd. v. Union of India held that the conditions contained in Ext. Pl, concerning free medical treatment to inpatients and outpatients etc. are continuing obligations of the importer and if it is found that those conditions are not complied with, exemption already granted can be withdrawn. Apparently, pursuant to the said decision, the Director General of Health Services issued Ext. P3 communication to the petitioner, calling upon it to furnish certain details mentioned therein. The petitioner forwarded Ext. P4 reply, through the Kerala Government. Thereafter, the petitioner has been served with a copy of Ext. P5 letter, addressed by the Kerala Government to the Director General of Health Services, stating that the State Government is not in a position to certify or recommend the information/documents furnished by the petitioner hospital for the reasons mentioned therein. Upon receipt of that letter, the petitioner filed Exhibit P6 representation before the State Government, pointing out that the stand taken by it, in Exhibit P5, is not correct. A copy of it was forwarded to the Director General of Health Services also. Later, the petitioner has been served with Exhibit P7 order dated 5.12.2000, cancelling Exhibit P2, for the reason that the Hospital does not satisfy the conditions contained in Exhibit P1, for the grant of exemption from payment of customs duty. Relying on that, the Commissioner of Customs passed Exhibit P8 order, demanding a customs duty of Rs. 23,41,202/- from the petitioner. A redemption fine of Rupees Five lakhs and a penalty of Rupees Two lakhs were also imposed. The petitioner submits, it challenged Exhibit P8 before the Customs, Excise and Service Tax Appellate Tribunal. The said Tribunal quashed Exhibit P8 and remanded the matter to the Commissioner of Customs, who again passed an order similar to Exhibit P8, which is now pending in appeal before the CESTAT. Since Exhibit P7 was relied on by the Commissioner of Customs, the petitioner challenged that order before this Court, by filing W.P.(C)No. 29212 of 2003. This Court quashed the said order and directed the Director General of Health Services to pass a fresh order, after affording an opportunity of being heard to the petitioner. Pursuant to the said direction of this Court, the petitioner was heard and Exhibit P10 order has been passed, ordering that it is not eligible for exemption under Exhibit P1 notification. In other words, Exhibit F2 has been withdrawn. This writ petition is filed, challenging Exhibit P10.

(2.) The Director General, in Exhibit P10, has found that the documents produced by the Hospital, to support its claim that it is providing free treatment to 40% of the outpatients and 10% of the inpatients, were tampered documents. The petitioner submits, the said finding has been rendered without putting it on notice. The finding of tampering was arrived at, relying on the report filed by the customs authorities, concerning the very same subject matter. The petitioner submits, copy of the said report was not served on it. Therefore, the impugned order is vitiated by the violation of the principles of natural justice. The petitioner further contends, even if it does not provide free medical treatment to 40% of the outpatients, if the number of patients treated in medical camps is also reckoned, it is satisfying the stipulation that free medical treatment should be extended to 40% of the outpatients. It is contended that the claim of the petitioner, based on the number of outpatients, has been wrongly rejected. It is also pointed out that the Madras High Court in Apollo Hospitals Enterprises Ltd. v. Union of India 2001 (46) RLT 249 has ordered the competent authority to reckon the number of patients treated in the medical camps also, for satisfying the requirements of Ext. P1 notification. The petitioner also relied on the decision of the Bombay High Court in Shashank Bhalchandra Subhedar (Dr.) v. Dir Gen. of Health Services , in support of its contention regarding violation of the principles of natural justice.

(3.) The respondents have filed a detailed counter affidavit, dealing with the contentions of the petitioner. They reiterated the stand taken in the impugned order. Relying on the decision of the Apex Court in Mediwell Hospital's case (supra), it is submitted that the obligation to satisfy the requirements of Exhibit P1 exemption notification, is a continuing obligation. They also rely on the decision of the Karnataka High Court in Medical Relief Society of South Kanara v. Union of India , wherein it was held that the treatment, if any, given to the persons attending the medical camps, cannot be reckoned as treatment granted to the outpatients, in terms of Exhibit P1 notification.