Case: Ratilal Panachand Gandhi &amp; Others Vs. State of Bombay &amp; Others

collections are all merged in the general revenue of the State to be applied for general public purposes. Tax is a common burden and the only return which the tax-payer gets is participation in the common benefits of the State. Fees, on the other hand, are payments primarily in the public interest, but for some special service rendered or some special work done for the benefit of those from whom the payments are demanded. Thus id fees there is always an element of quid pro quo; which is absent in a tax. It may not be possible to prove in every case that the fees that are collected by the Government approximate to the expenses that are incurred by it in rendering any particular kind of services or in performing any particular work for the benefit of certain individuals. But in order that the collections made by the Government can rank as fees, there must be correlation between the levy imposed and the expenses incurred by the State for the purpose of rendering such services. This can be proved by showing that on the face of the legislative provision itself, the collections are not merged in the general revenue but are set apart and appropriated for rendering these services.23. Thus two elements are essential in order that a payment may be regarded as a fee. In the first place, it must be levied in consideration of certain services which the individuals accepted either willingly or unwillingly and in the second place, the amount collected must be car-marked to meet the expenses of rendering these services and must not go to the general revenue of the State to be spent for general public purposes. As has been pointed out in the Madras case mentioned above, too much stress should not be laid on the presence or absences of what has been called the coercive element. It is not correct to say that as distinguished from taxation which is compulsory payment, the payment of fees is always voluntary, it being a matter of choice with individuals either to accept the service or not for which fees are to be paid. We may cite for example the case of a licence fee for a motor car. It is argued that this would be a fee and not a tax, as it is optional with a person either to own a motor car or not and in case he does not choose to have a motor car, he need not pay any fees at all. But the same argument can be applied in the case or a house tax or land tax. Such taxes are levied only on those people who own lands or houses and it could be said with equal propriety that a man need not own any house or land and in that event he could avoid the payment of these taxes. In the second place, even if the payment of a motor licence fee is a voluntary payment, it can still be regarded as tax if the fees that are realised on motor licences have not relation to the expenses that the Government incurs in keeping an office or bureau for the granting of licences and the collections are not appropriated for that purpose but go to the general revenue. Judging by this test, it appears to us that the High Court was perfectly right in holding that the contributions imposed under S. 58 of the Bombay Public Trusts Act are really fees and not taxes.24. In the first place, the contributions which are collected under S. 58, are to be credited to the Public Trusts Administration Fund as constituted under S. 57. This is a special fund which is to be applied exclusively for payment of charges for expenses incidental to the regulation of public trusts and for carrying into effect the provisions of the Act. It vests in the Charity Commissioner and the custody and investments of the money belonging to the fund and the disbursement and payment therefrom are to be effected not in the manner in which general revenues are disbursed but in the way prescribed by the rules made under the Act. The collections, therefore, are not merged in the general revenue, but they are car-marked and set apart for this particular purpose. It is true under that S. 6-A of the Act, the officers and servants appointed under the Act are to draw their pay and allowances from the Consolidated Fund of the State but we agree with what has been said by Mr. Justice Shah of the Bombay High Court that this provision is made only for the purpose of facilitating the administration and not with a view to mix up the fund with the general revenue collected for Government purposes. This would be clear from the provision of S. 6-B which provides that our of the Public Trusts Administration Fund all the costs, which the State Government may determine on account of pay pension, leave and other allowances of all the officers appointed under this Act, shall be paid. It is the Public Trust Administration Fund, therefore, which meets all the expenses of the administration of trust property within the scheme of the Act, and it is to meet the expenses of this administration that these collections are levied. As has been said by the learned Judges of the High according to the concept of a modern State, it is not necessary that services should be rendered only at the request of particular people, it is enough that payments are demanded for rendering services which the State considers beneficial in the public interest and which the people have to accept whether they are willing or not. Our conclusion, therefore, is that S. 58 is not ultra vires of the State Legislature by reason of the fact that it is not a tax but a fee which comes within the purview of entry 47 of List III in Schedule 7 of the Constitution.25.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]Thus, subject to the restrictions which this Article imposes, every person has a fundamental right under our Constitution not merely to entertain such religious belief as may be approved of by his judgment or conscience but to exhibit his belief and ideas in such overt acts as are enjoined or sanctioned by his religion and further to propagate his religious views for the edification of others. It is immaterial also whether the propagation is made by a person in his individual capacity or on behalf of any church or institution. The free exercise of religion by which is meant the performance of outward acts in pursuance of religious belief, is, as stated above, subject to State regulation imposed to secure order, public health and morals of the people.What sub-cl. (a) of cl. (2) of Article 25 contemplates is not State regulation of the religious practices as such which are protected unless they run counter to public health or morality but of activities which are really of an economic, commercial or political character though they are associated with religiouslanguage of the two cls. (b) and (d) of Art. 26 would at once bring out the difference between the two. In regard to affairs in matters of religion, the right of management given to a religious body, is a guaranteed fundamental right which no legislation can take away. On the other hand, as regards administration of property which a religious denomination is entitled to own and acquire, it has undoubtedly the right to administer such property but only in accordance with law. This means that the State can regulate the administration of trust properties by means of laws validly enacted; but here again it should be remembered that under Art 26(d), it is the religious denomination itself which has been given the right to administer its property in accordance with any law which the State may validly impose. A law, which takes away the right of administration altogether from the religious denomination and vests it in any other or secular authority, would amount to violation of the right which is guaranteed by Art, 26 (d) of theReligious practices or performances of acts in pursuance of religious belief are as much a part of religion as faith or belief in particular doctrines. Thus if the tenets of the Jain or the Parsi religion lay down that certain rites and ceremonies are to be performed at certain times and in a particular manner, it cannot be said that these are secular activities partaking or commercial or economic, character simply because they involve expenditure of money or employment of priests or the use of marketable commodities. No outside authority has any right to say that these are not essential parts of religion and it is not open to the secular authority of the State to restrict or prohibit them in any manner they like under the guise of administering the trust estate.Of course, the scale of expenses to be incurred in connection with these religious observances may be and is a matter of administration of property belonging to religious institutions; and if the expenses on these heads are likely to deplete the endowed properties or affect the stability of the institution, proper control can certainly be exercised by State agencies as the lawis a well-settled principle of law that trustees in charge of trust properties should not keep cash money in their hands which are not necessary for immediate expenses; and a list of approved securities upon which trust money could be invested is invariably laid down in every legislation on the subject of trust. There is nothing wrong in S. 36 of the Act. Immovable trust properties are inalienable by their very nature and a provision that they could be alienated only with the previous sanction of the Charity Commissioner seems to us to be a perfectly salutarythe author of the trust chooses to appoint he Charity Commissioner a trustee, no objection can possibly be taken to such action; but if the court is authorised to make such appointment, the provisions of this section in the general form as it stands appear to us to be open to seriousour opinion, the provision of S. 44 relating to the appointment of the Charity Commissioner as a trustee of any public trust by the court without any reservation in regard to religious institutions like temples and Maths is unconstitutional and must be held to be void.The very same objections will apply to the provisions of cls. (3) to (6) of S. 47. The court can certainly be empowered to appoint a trustee to fill up a vacancy caused by any of the reasons mentioned in S. 47(1), and it is quite a salutary principle that in making the appointment the court should have regard to matters specified in cl. (4) of S. 47; but the provision of cl. (3) to the extent that it authorises the court to appoint the Charity Commissioner as the trustee - and who according to the provisions of clause (5) is to be the sole trustee - cannot be regarded as valid in regard to religious institutions of the type we have just indicated. To allow the Charity Commissioner to function as the Sheba it of a temple or the superior of a Math would certainly amount to interference with the religious affairs of this institution.We hold accordingly that the provisions of cls. (3) to (6) of S. 47 to the extent that they related to the appointment of the Charity Commissioner as a trustee of a religious trust like temple and Math are invalid. If these provisions of S. 47 are eliminated no objection can be taken to the provision of S. 48 as it stands. This section will in that event be confined only to cases where the Charity Commissioner has been appointed a trustee by the author of the trust himself and the administration charges provided by this section can certainly be levied on thesections purport to lay down how the doctrine of cy pres is to be applied in regard to the administration of public trust of a religious or charitable character. The doctrine of cy pres as developed by the Equity Courts in England, has been adopted by our Indian courts since a long time past.The provisions of sections 55 and 56, however, have extended the doctrine much beyond its recognised limits and have further introduced certain principles which run counter to well-established rules of law regarding the administration of charitable trusts. When the particular purpose for which a charitable trust is created fails or by reason of certain circumstances the trust cannot be carried into effect either in whole or in part or where there is a surplus left after exhausting the purposes specified by the settlor the court would not when there is a general charitable intention expressed by the settlor, allow the trust to fail but would execute it cy press, that is to say, in some way as nearly as possible to that which the author of the trust intended. In such cases, it cannot be disputed that the court can frame a scheme and give suitable directions regarding the objects upon which the trust money can be spent.It is well established, however, that where the donors intention can be given effect to the court has no authority to sanction any deviation from the intentions expressed by the settlor on the grounds of expediency and the court cannot exercise the power of applying the trust property or its income to other purposes simply because it considers them to be more expedient or more beneficial than what the settlor hadreligious sect or denomination has the undoubted right guaranteed by the Constitution to manage its own affairs in matters of religion and this includes the right to spend the trust property or its income for the religious purposes and objects indicated by the found of the trust or established by usage obtaining in particular institution. To divert the trust property or funds for purposes which the Charity Commissioner or the court considers expedient or proper, although the original objects of the founder can still be carried out, is to our minds an unwarrantable encroachment on the freedom of religious institutions in regard to the management of their religiousconsider it to be a violation of the freedom of religion and of the right which a religious denomination has under our Constitution to manage its own affairs in matters of religion, to allow any secular authority to divert the trust money for purposes other than those for which the trust was created. The State can step in only when the trust fails or is incapable of being carried out either in whole or in part. We hold, there chat Cl. (3) of S. 55 which contains the offending provision and the corresponding provision relating to the powers of the court occurring in the latter part of S. 56 (1), must be held to bethis contribution is levied purely for purposes of due administration of the trust property and for defraying the expenses incurred in connection with the same, no objection could be taken to the provision of the section on the ground of its infringing any fundamental rights of theis no doubt that a fee resembles a tax in many respects and the question which presents difficulty is, what is the proper test by which the one could be distinguished from the other? A tax is undoubtedly in the nature of a compulsory exaction of money by a public authority for public purposes the payment of which is enforced by law. But the other and equally important characteristic of a tax is, that the imposition is made for public purpose to meet general expenses of the State without reference to any special advantage to be conferred upon the payers of thefollows, therefore, that although a tax may be levied upon particular classes of persons or particular kinds of property, it is imposed not to confer any special benefit upon individual persons and the collections are all merged in the general revenue of the State to be applied for general public purposes. Tax is a common burden and the only return which the tax-payer gets is participation in the common benefits of theon the other hand, are payments primarily in the public interest, but for some special service rendered or some special work done for the benefit of those from whom the payments are demanded. Thus id fees there is always an element of quid pro quo; which is absent in a tax. It may not be possible to prove in every case that the fees that are collected by the Government approximate to the expenses that are incurred by it in rendering any particular kind of services or in performing any particular work for the benefit of certain individuals. But in order that the collections made by the Government can rank as fees, there must be correlation between the levy imposed and the expenses incurred by the State for the purpose of rendering such services. This can be proved by showing that on the face of the legislative provision itself, the collections are not merged in the general revenue but are set apart and appropriated for rendering thesetwo elements are essential in order that a payment may be regarded as a fee. In the first place, it must be levied in consideration of certain services which the individuals accepted either willingly or unwillingly and in the second place, the amount collected must be car-marked to meet the expenses of rendering these services and must not go to the general revenue of the State to be spent for general publicthe first place, the contributions which are collected under S. 58, are to be credited to the Public Trusts Administration Fund as constituted under S. 57. This is a special fund which is to be applied exclusively for payment of charges for expenses incidental to the regulation of public trusts and for carrying into effect the provisions of the Act. It vests in the Charity Commissioner and the custody and investments of the money belonging to the fund and the disbursement and payment therefrom are to be effected not in the manner in which general revenues are disbursed but in the way prescribed by the rules made under the Act. The collections, therefore, are not merged in the general revenue, but they are car-marked and set apart for this particularis true under that S. 6-A of the Act, the officers and servants appointed under the Act are to draw their pay and allowances from the Consolidated Fund of the State but we agree with what has been said by Mr. Justice Shah of the Bombay High Court that this provision is made only for the purpose of facilitating the administration and not with a view to mix up the fund with the general revenue collectedpurposes. This would be clear from the provision of S. 6-B which provides that our of the Public Trusts Administration Fund all the costs, which the State Government may determine on account of pay pension, leave and other allowances of all the officers appointed under this Act, shall be paid. It is the Public Trust Administration Fund, therefore, which meets all the expenses of the administration of trust property within the scheme of the Act, and it is to meet the expenses of this administration that these collections arehas been said by the learned Judges of the High according to the concept of a modern State, it is not necessary that services should be rendered only at the request of particular people, it is enough that payments are demanded for rendering services which the State considers beneficial in the public interest and which the people have to accept whether they are willing or not. Our conclusion, therefore, is that S. 58 is not ultra vires of the State Legislature by reason of the fact that it is not a tax but a fee which comes within the purview of entry 47 of List III in Schedule 7 of the Constitution.