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TMI Blog1975 (2) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... cers. The accounting year of the Company is from 1st of October to the 30th of September of each year. In the years ending 30-9-1954, 30-9-1955 and 30-9-1956, the respondent received three sums from the international organisation, namely, Rs. 1,97,302/-, Rs. 2,50,228-14-0 and Rs. 2,67,732-15-0. Besides these amounts, the respondent had made collections in India. Upon all these amounts the respondent was called upon to pay a contribution Of 2 per cent as required by Section 58 of the Act read with Rule 32 of the Bombay Public Trust Rules. The respondent claimed exemption from liability to pay contribution upon the three donations. Appellant No. 3 disallowed the claim. The respondent's appeal against the order was dismissed by appellant No. 4. The respondent thereupon filed a writ partition in the High Court of Bombay for a declaration that the provision for levy of contribution contained in Section 58 of the Act and Rules 32 and 33 of the Rules as also the provisions of Sections 2 and 4 of the Maharashtra Act 29 of 1962 (hereinafter referred to as the "Amending Act of 1962") were beyond the powers of the State Legislature and that the levy of contribution on the three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering made with a specific direction that they shall form part of the corpus of the public trust. 7. Rule 32(1) of the Bombay Public Trust Rules, 1951, framed under Section 84, Clause (b), provided that every public trust other than a trust exclusively for the purpose of secular education imparted by a recognised institution or exclusively for the purpose of medical relief shall pay annually to the Public Trusts Administration Fund out of its property or funds a contribution at the rate of 2 per cent of its gross annual income or, where the public trust is a dharmada, its gross annual collection or receipts. In Sub-rule (3) of Rule 32, it was provided that in calculating the gross annual income or receipts for the purpose of assessing the contribution the following deduction shall be allowed : donations given with specific directions that they shall form part of the corpus (vide Explanation to Section 58). By a Government notification dated 3-12-1953, Rule 32 was amended. The provision for levy of contribution was substantially the same as in Sub-rule (I) of Rule 32 but the amended Sub-rule (3) of Rule 32 was as follows : (3) In calculating the gross annual income of a Publi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emed to have been made in the principal Act and the provisions of Clause (iii) of Sub-rule (3) of Rule 32 of the Bombay Public Trust Rules, 1951, shall be deemed to have been deleted from the date on which those rules came into force; and accordingly, Rule 32 of these rules as amended shall be deemed always to have been validly made and to have full effect, as if it had been duly made under the principal Act as amended by this Act and anything done or action taken under that Rule shall be deemed to have been validly done or taken. 10. An amendment was also effected by the Act itself in Rule 32 by deleting Clause (iii) of Sub-rule (3) of Rule 32. 11. The validity of these amendments was not challenged before this Court. 12. The two main questions which arise for consideration in this appeal are : (1) whether the levy of contribution under Section 58 read with Rule 32(3) was a tax from the inception of the levy or whether, although the levy was a fee in its inception, it assumed the character of tax in any subsequent year by reason of the accumulation of the surplus of the income over the expenditure, and (2) whether the levy of contribution on the three donations was justified. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Government or the agency in rendering the service though in many cases the costs are arbitrarily assessed. Fees are ordinarily uniform but absence of uniformity is not a criterion on which alone at can be said that a levy is in the nature of tax. In the case of a fee, no account is taken of the varying abilities of different recipients of the service to pay. As a fee is regarded as a sort of return or consideration for services rendered, it is necessary that the levy of fees should be correlated to the expenses incurred by the agency in Tendering the services. "If the special service rendered is distinctly and primarily meant for the benefit of a specified class or area the fact that in benefiting the specified class or area the state as a whole may ultimately and indirectly be benefited would not detract from the character of the levy as a fee." Hingir-Ramour Coal Co. Lt. v. The State of Orissa [1961]2SCR537 - It is also generally necessary that the payments demanded for rendering of such services must be set apart or specifically appropriated for that purpose and that they should not be merged in the general revenue of the State to be spent for general public pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the amount of Rs. 68,000 spent for paying the bye-lanes and Rs. 20,000 for lighting of streets and lanes cannot be considered to have been spent in rendering services to the rickshaw owners and rickshaw drivers. The reason was that under Section 7(a) of the Act it was the statutory duty of the Municipal Board to light public streets and places and under Clause (h) of the same section to construct and maintain public streets, culverts etc. The expenditure under these two items was incurred by the Municipal board in the discharge of its statutory duty and it is manifest that the licence fee cannot be imposed for reimbursing the cost of ordinary municipal services which the Municipal Board was bound under the statute to provide to the general public (see the decision of the Madras High Court in India Sugar and Refineries Ltd. v. The Municipal Council, Hospet I.L.R. 1943 Mad 521. 17. In Delhi Cloth and General Mills Co. Ltd. v. Chief Commissioner, Delhi [1970]2SCR348 the point for consideration was whether the amount payable for renewal of licence to run the factory in question was a fee or tax. The Court observed: The High Court further found, which finding being of fact, must be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the nature of fee as the expenditure was 62 per cent of the contributions levied and as there was approximate correlation. 20. It was, however, argued on behalf of the respondent on the basis of the decisions in Corporation of Calcutta v. Liberty Cinema [1965]2SCR477 and Nagar Mahapalika, Varanasi v. Durga Das Bhattacharya (supra) that the exercise of the power of supervision and control of public trusts under the provisions of the Act would not be special services, that performance of the statutory functions and duties under the Act is owed to the public and cannot be regarded as special benefits to the public trusts in the state for which a fee can be exacted as consideration. 21. The object of the Act as seen from its preamble is to regulate and make better provisions for the administration of public religious and charitable trusts in the State of Bombay. Chapter IV of the Act provides for registration of public trusts. Chapter V deals with submission of the budgets by the trustees of certain trusts and maintenance of accounts. Chapter V-A concerns the investment of public trust money and restrictions on alienations of trust property. Chapter VI deals with control. It make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State it became necessary to expand the Charity Organisation and to increase the staff for supervision and control. It also became necessary to have more regional offices for the more effective and immediate supervision and control. The expenditure in constructing buildings for locating the head office and regional offices and the increase in the allowances of other amenities to the staff have also to be included in the costs of the services. When there is surplus, it cannot immediately be said that the surplus must necessarily go in reduction of the rate of contribution to be levied thereafter. We think that it would neither be expedient nor prudent to lay down any abstract proposition that whenever there is surplus in a particular year or a number of years, that surplus must always be taken into consideration and the rate of the contribution should be reduced for the next year or subsequent years. An organisation like the one in question may have to incur capital expenditure for the better administration of the trusts and it might not be able to foresee all the contingencies in which such expenditure will have to be incurred for the more efficient working of the organisation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd regional offices in buildings to be owned by the organisation and incurring of capital expenditure in that behalf. The Charity Organisation has purchased a building worth about Rs. 30 lakhs. Even according to the Division Bench, investment of the surplus in buildings for locating the head and regional offices cannot be said to be diversion of the surplus for purposes alien to the object of the organisation, namely, the better administration of the trusts. Therefore, we do not think that the contribution had assumed the character of a tax at the end of March, 1958. 25. The surplus in the account of the Public Trusts Administration Fund at the end of March, 1970, was Rs. 84,49,473/- after meeting/ the capital expenditure of Rs. 17,46,794/- incurred during the years 1953 to 1970. In the figure of Rs. 84,49,473/- is included the figure of Rs. 7,06,016/-, the accumulated balances under the repealed enactments transferred to the Public Trusts Administration Fund, plus interest of Rs. 7,13,004/- on the said figure vide exhibit No. 3. Even deducting the Rs. 14 lakhs from Rs. 84 lakhs, the surplus in the account of the Public Trusts Administration Fund at the end of March, 1970, was R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal organisation in London to the respondent. We think that the High Court was right. 28. As already stated, the Amending Act came into force on 17-8-1962. The Division Bench was of the view that the levy of contribution on these amounts was ultra vires for the reason that at the time the levy was made it had ceased to be a fee and become a tax. We do not think that the High Court was right. No doubt, the demand for contribution was made only after the Amending Act came into force. But by virtue of the retrospective operation of the amended Section 58 as provided in Section 4 of the Amending Act, the respondent became liable to pay contribution in respect of the three donations in the years in which they were received. It may be recalled that these three amounts were received by the respondent in the years 1954, 1955 and 1956. By virtue of the deeming provision in Section 58 as amended, these donations became exigible to pay the contribution in the relevant years. We do not understand how these amounts which became exigible to levy of contribution in those years by virtue of the deeming provisions in Section 58 became exonerated for the liability even on the basis of the reasoning ..... X X X X Extracts X X X X X X X X Extracts X X X X
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