M/S. LISIE MEDICAL INSTITUTIONSversusTHE STATE OF KERALA AND ORS.

354                      [2023]REPORTS
               SUPREME COURT    6 S.C.R. 354              [2023] 6 S.C.R.


A                   M/S. LISIE MEDICAL INSTITUTIONS
                                       v.
                    THE STATE OF KERALA AND ORS.
                        (Civil Appeal No. 6799 of 2017)
B                            FEBRUARY 09, 2023
              [DR. DHANANJAYA Y CHANDRACHUD, CJI,
               PAMIDIGHANTAM SRI NARASIMHA AND
                       J. B. PARDIWALA, JJ.]
            Kerala Building Tax Act, 1975 – s.3(1) – Interpretation of the
C
      provision for exemptions contained in s.3(1) – The two judge Bench
      in Lisie Medical Institutions v. State of Kerala has doubted the
      correctness of certain observations contained in an earlier decision
      of two Judges in SH Medical Centre Hospital vs State of Kerala –
      While construing the provisions of s.3(1)(b) of the Kerala Building
D     Tax Act 1975, the two Judge Bench in SH Medical Centre Hospital,
      has incorporated the observations which suggests that the
      Explanation to Section 3(1) to mean that a ‘charitable purpose’ is
      confined only to relief of the poor and free medical relief – Held:
      This observation of the two-Judge Bench in SH Medical Centre
      Hospital does not accord with the plain meaning of the Explanation
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      to Section 3(1) – The two judge bench in SH Medical Centre Hospital
      conflated the use of the word ‘include’ with ‘means’ – The
      Explanation goes to indicate that ‘charitable purposes’ includes
      and is, therefore, not confined to the relief of the poor and free
      medical relief – Consequently, the decision in SH Medical Centre
F     Hospital to the extent of the interpretation which is placed on the
      Explanation to Section 3(1)(b) of the Kerala Building Tax Act 1975
      does not correctly reflect the position in law – The decision in SH
      Medical Centre Hospital is, therefore, overruled to the above extent.
            SH Medical Centre Hospital v. State of Kerala (2014)
G           11 SCC 381 – Overruled.
                             Case Law Reference
      (2017) 14 SCC 533              overruled               Para 1


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                                      354
    M/S. LISIE MEDICAL INSTITUTIONS v. THE STATE OF KERALA                        355
                           AND ORS.

      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6799                         A
of 2017.
      From the Judgment and Order dated 18.07.2016 of the High Court
of Kerala at Ernakulam in CRP No. 1386 of 2016 and WPC No. 20448
of 2016.
      R. Basant, Sr. Adv., K. V. Mohan, Jijo Paul Kallookkaran, K. V.             B
Balakrishnan, Rahul Kumar Sharma, Vishnu P., Advs. for the Appellant.
      V. Giri, Sr. Adv., C. K. Sasi, Abdulla Naseeh V T, Ms. Meena K
Poulose, Ramesh Babu M. R., Advs. for the Respondents.
         The Judgment of the Court was delivered by                               C
         DR. DHANANJAYA Y CHANDRACHUD, CJI
       1. The present reference to a three Judge Bench has been
occasioned in a referring judgment of a two Judge bench in Lisie Medical
Institutions Vs State of Kerala1. The two judge Bench has doubted the
correctness of certain observations contained in an earlier decision of           D
two Judges in SH Medical Centre Hospital vs State of Kerala2.
       2. We have heard Mr R Basant, senior counsel appearing on
behalf of the appellant and Mr V Giri, senior counsel appearing on behalf
of the respondents.
      3. The issue turns on the interpretation of the provision for               E
exemptions contained in Section 3(1) of the Kerala Building Tax Act,
1975, which is extracted below:
         “3. Exemptions – (1) Nothing in this Act shall apply to
         (a) buildings owned by the Government of Kerala or the                   F
         Government of India or any local authority; and
         (b) buildings used principally for religious charitable or educational
         purposes or as factories or workshops.
      Explanation.– For the purpose of this sub-section, “Charitable
purpose” includes relief of the poor and free medical relief.”                    G
     4. Clause (b) of sub-Section (1) of Section 3 of the Kerala Building
Tax Act 1975 stipulates that nothing in the enactment shall apply to

1
    (2017) 14 SCC 533
2
    (2014) 11 SCC 381                                                             H
356             SUPREME COURT REPORTS                            [2023] 6 S.C.R.


A     buildings used “principally for ... Charitable ... purposes”. The Explanation
      [now Explanation (1)] indicates that for the purpose of the sub-section
      ‘charitable purpose’ includes “relief of the poor and free medical relief”.
      Clearly, therefore, the Explanation indicates that the meaning of the
      expression ‘charitable purpose’ is not confined to relief of the poor and
      free medical relief as is evidenced by the use of the expression ‘includes’.
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      When a statute uses the expression ‘includes’, it is a well settled principle
      of interpretation that the elucidation is not intended to be exhaustive.
            5. However, while construing the provisions of Section 3(1)(b) of
      the Kerala Building Tax Act 1975, the two Judge Bench in SH Medical
      Centre Hospital (supra), has incorporated the following observations in
C     Paragraph 17 of the Judgment:
            “The High Court has correctly interpreted the “Explanation” clause
            to Section 3(1) of the Act to hold that “charitable purpose” means
            “relief of the poor and free medical relief”.
D                                                            (Emphasis Supplied)
              6. The observation which is extracted above suggests that the two-
      Judge Bench construed the Explanation to Section 3(1) to mean that a
      ‘charitable purpose’ is confined only to relief of the poor and free medical
      relief. This observation of the two-Judge Bench in SH Medical Centre
E     Hospital (supra) does not accord with the plain meaning of the
      Explanation to Section 3(1). It was this aspect which was noted in the
      referring judgment by A K Sikri, J in the following observations:
            “16. … With due respect to the Bench which rendered the judgment
            in S.H. Medical Centre Hospital Vs State of Kerala, (2014) 11
F           SCC 381, it appears that an error in interpreting Explanation I to
            Clause 1 of Section 3 of the Act has occurred in not noticing that
            it contains the word “includes” and not “means”. This error led to
            holding that “charitable purpose” meant only “relief of the poor
            and free medical relief”. Relief to the poor and free medical relief
            is only one of the facets to charitable purpose and Explanation
G           simply clarifies that too to be a charitable purpose. However, the
            inclusive definition points out that relief to poor and free medical
            relief is not exhaustive as to what charitable purpose would mean.
            Thus, in order to find out the true scope of charitable purpose, one
            will have to look into the judgments of this Court, even if this very
            expression is examined in the context of the Income Tax Act.”
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 M/S. LISIE MEDICAL INSTITUTIONS v. THE STATE OF KERALA                        357
      AND ORS. [DR. DHANANJAYA Y CHANDRACHUD, CJI]

        7. The two judge bench in SH Medical Centre Hospital (supra)           A
conflated the use of the word ‘include’ with ‘means’. The Explanation
to Section 3(1)(a) uses the expression ‘includes’. The plain intendment
is that relief of the poor and free medical relief are not exhaustive of the
content of charitable purpose.
       8. At this stage, it would be material to note the submission of        B
the respondents, urged by Mr V Giri, senior counsel, to the effect that
apart from the interpretational issue which is addressed in the decision of
the two-Judge Bench in SH Medical Centre Hospital (supra), the Court
has dwelt on other aspects of Section 3(1). Mr. Giri adverted to the
expression “buildings used principally for … charitable … purposes” in
Section 3(1)(b) and urges that the interpretation of that phrase in the        C
decision in SH Medical Centre Hospital is correct.
       9. Undoubtedly, Section 3(1)(b) provides that nothing in the Act
shall apply to buildings which are used ‘principally’ for specific purposes,
including among them, ‘charitable purposes’. The expression “principally”
conveys the meaning of that which is the dominant purpose. The                 D
interpretation placed by the two-Judge Bench on the expression
“principally used for charitable purposes” does not call for interference
in view of the statutory language used in Section 3(1). Principal use
refers to the dominant substantive use as distinguished from an ancillary
use.                                                                           E
      10. The Explanation goes to indicate that ‘charitable purposes’
includes and is, therefore, not confined to the relief of the poor and free
medical relief. Consequently, the decision in SH Medical Centre
Hospital (supra) to the extent of the interpretation which is placed on
the Explanation to Section 3(1)(b) of the Kerala Building Tax Act 1975         F
does not correctly reflect the position in law which is clarified above.
The decision in SH Medical Centre Hospital is, therefore, overruled to
the above extent.
       11. In the present case, the Division Bench of the Kerala High
Court, while disposing of the Writ Appeal, has relied only on the decision     G
of the two Judge Bench of this Court in SH Medical Centre Hospital
(supra). The impugned judgment of the Division Bench is extracted below:
      “The issue raised in this writ appeal concerning the claim of the
      appellant for exemption from Building Tax levied under the Kerala
      Building Tax Act, 1975 is fully covered against it by the judgment
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358                SUPREME COURT REPORTS                          [2023] 6 S.C.R.


A            of the Apex Court in S.H.Medical Centre Hospital v. State of
             Kerala [2014 (1) KHC 222]. This being the factual position, we
             do not see any merit in this appeal.
             Appeal fails and it is dismissed accordingly.”
             12. Since the position in regard to the interpretation of the provisions
B     of the Explanation to Section 3(1) of the Kerala Building Tax Act 1975
      has been clarified above, we are of the considered view that the impugned
      judgment of the High Court dated 18 July 2016 should be set aside and
      the Writ Appeal be restored to the file of the High Court for a decision
      after keeping open the factual analysis based on the interpretation of
C     Section 3(1).
            13. Writ Appeal No 1386 of 2016 in Writ Petition (Civil) No 20448
      of 2016 is accordingly restored to the file of the Kerala High Court for
      disposal in view of the above interpretation.
             14. The reference is answered in the above terms.
D
             The appeal is accordingly disposed of.
             15. Pending applications, if any, stand disposed of.

      Ankit Gyan                                                  Reference answered.
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