In Brief
Lisie Medical Institutions, a registered charitable trust operating a hospital, challenged rejection of its exemption claim from building tax under the Kerala Building Tax Act, 1975. The High Court dismissed its plea, relying on S.H. Medical Centre Hospital v. State of Kerala. The Supreme Court found error in that precedent's interpretation of 'Explanation I' to Section 3(1), which said charitable purpose 'includes' (not 'means') relief to the poor and free medical relief. The Court held such relief is merely one facet of charitable purpose, not exhaustive. The dominant object test applies: if an institution's predominant purpose is charitable (not profit-making) and it provides medical services at subsidised rates by reinvesting income, it qualifies as charitable. The Court disagreed with the Division Bench and referred the matter to a Larger Bench for reconsideration."
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