LexSTATE OF MAHARASHTRA & ORS. versus THE SALVATION ARMY, WESTERN INDIA TERRITORY
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ST ATE OF MAHARASHTRA & ORS.
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THE SALVATION ARMY, WESTERN INDIA TERRITORY
February 10, 1975
[K. K. MATHEW, P. N. BHAGWATI AND N. L. UNTWALIA, JJ.]
Bombay Public T_rusts Act, 1950, ss. 57 and 58 and Rule 32 of rules
framed under Act-Difference between tcx and fee-Liability for co11tributio11 by
public trust at 2% of gross income-If tax or fee.
Section 57(1) of the Bombay Public Trusts Act, 1950 states that there shall
be established a Fund to be,called the 'Public Trusts Administration Fund' and that
the fund shall vest. in the Charity Commissioner appointed under the Act.. One
of the amounts which ~o to make the Fund is the contribution made by a public
trust under s. 58. Section 58 as amended by Amending Act, 1962, provides that
in the case of a public trust, other than a dharmada, the contribution shall be at
the prescribed rate on the ·gross annual income. Gross annual income is defined
to mean the gross income from all sources, in:luding donations and offerings
excluding, inter alia payments made with a specific direction that the payme~t
made shall form part of the corpus of the public trust.
Rule 32 of the rules
made under the Act prescribed the rate of 2 % of the gross annual income, In
the Amending Act, provision was made in s. 4 for retrospective operation of
the provisions of the Act and the rule.
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The respondent was registered as a public limited company under the Indian
Companies Act, 1913, and also under the Bombay Public Trusts Act, 1950. In
the years 1954, 1955 and 1956 it received certain sums from its international
organisation.
Upon these amounts and other collections in India, in 1963, the
respondent was called upon to pay the contribution of 2% as required by s. 58
of the Act read with r. 32. The respondent thereupon filed a writ petition in
the High Court challenging the levy. The High Court held that though the levy
was a fee in the beginning, it assumed the character of a tax by the end of 31
March, 1958, when there wa> a substantial surplus with the Fund, and that there-
after the levy was illegal and ulira vires as the actual levy was made after it
assumed the character of a tax.
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In appeal to this Court,
HELD : ( 1) The respondent has an independent legal personality as it was
registered under the Companies Act, and so, the amounts which it received can-
not but be regarded as donations coming within purview of s. 58 and.· r. 32.
[487C-D]
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2(a) A tax is a compulsory exaction of money by a public authorify for··a
public purpose enforceable by law and is not a payment for any speci{\c service.
rendered. The levy of a tax is for the purpose of general revenue, which, when
collected, for~ part of the public revenues of the. State. !here is. no element
of quid pro quo between the tax payer and the public ~uthonty. A fe~1 h!>~ever,
is generally defined to be a charge for a special service ren,dered to "lpd1V1duals
bv the government or. some other agency like a local authonty or statutory cor-
poration. The amount of fee levied is supposed to be based on the exl?en~es
incurred in rendering the services though, in many cases, the costs are arb1tarily
assessed. Fees are generally uniform but absence of uniformi<y is not a criteri~n
on which alone it can be said that the levy is in the nature of a !&if. As m fee 1s.
regarded as a sort of return or consideration for services rendere4 it is necess3;rY "1•
that the levy of a fee should be correlated to the expenses incurred, in Jend~riqg ,·
the services. It is also generally necessary. that the paym~nts demanded for ten,.-~.
dering services must be set apart or specifically appropriated .for that purpose ..
and that they should not be merged in the general revenue o! the State to ~e speRr-·
for general public purposes. It may not, however, be possible to prove m every
case that the fees colle:ted always approximate to the expenses that mre incuri:e<t,•
in rendering the particular kind of services or in performing any. particular wort.·
\for the benefit of certain individuals.
[481E-482C]
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476
SUPREME COURT REPORTS
[1975] 3 s.c.R.
In the present case, the revenue expenditure, is about 62 % of the amount of
revenue. receipts. from 1953 to 1970. As there is approximate correlation, the
levy is in the nature of a fee.
[484B-C]
Hingir-Rampur Coal Co. Ltd. v. The State of Orissa [196112 S.C.R. 537 at
549, H. H. Sudhundra TirthaExcerpt shown. Read the full judgment & AI analysis in Lexace.