STATE OF MAHARASHTRA Vs. SALVATION ARMY WESTERN INDIA TERRITORY:SHRI LOHANA MAHA PARISHAD A PUBLIC TRUST

JUDGEMENT

(1.) The respondent in this appeal is the Salvation Army, Western India Territory. It is a part of the worldwide organization known as the Salvation Army. The headquarters of the organisation is in London. The organisation in India was registered as a public limited company uncle' the Indian Companies Act, l9l3, having obtained a licence to carry on its activities without suffixing the word 'limited' after its name. It is also registered under the Bombay Public Trusts Act, 1950 (hereinafter called the 'Act') and carries on various charitable activities. The Company has its headquarters in Bombay. The funds of the Company are administred under the Articles of Assoication by a Board consisting of a General, a Chief of Staff and various other officers The accounting year of the Company is from 1st of October to the 30th of September of each year. In the years ending 3-9-1954, 30-9-l955 and 30-9-1956, the respondent received three sums from the international organisation, namely Rupees 1,97,302/-, Rupees 2,50,228-14-o and Rupees 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 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 petition 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 l962 (hereinafter referred to as the "Amending Act of l962") were beyond the powers of the State Legislature and that the levy of contribution on the three donations was therefore illegal. The respondent also prayed for quashing the orders passed by appellants 3 and 4 disallowing its claim for exemption from levy of contribution upon the aforesaid sums.

(2.) A learned Single Judge of the High Court held that the levy, was bad as it was not a fee but tax.

(3.) Against this decision, an appeal was preferred.before the Division Bench by the appellants. The Bench came to the conclusion that though the levy of 2 per cent on the gross income of the public trusts was a fee in the beginning, it assumed the character of a tax by the end of 31st March, 1958 as there was a surplus of Rs. 30,44,541 by that time and therefore the levy assumed the character of tax and was illegal from that date. The Court further held that the levy of contribution on the three donations was ultra vires as the actual levy was made after it assumed the character of a tax. It is against this judgment that this appeal has been filed on the basis of certificate granted by the High Court.