Charity chief may have to return cess
Clara Lewis

The state charity commissioner may have to return the 2% cess it has
been collecting annually since 1975 from charity trusts in the state.
Several Jain temple trusts have already decided to seek a refund following
disclosure by the charity commissioner's office that according to a Supreme
Court order of 1975, the cess cannot be collected if the commissioner's
office has sufficient funds for its workings.

    The matter came to light after Girish Shah, a trustee of the Sheth
Vadilal Sarabhai Derasarji Trust, came across the verdict on the internet.
"Four months ago, I sought information from the charity commissioner's
office under the Right to Information Act. Initially, the office was
reluctant to provide the information till we threatened to shift the head
office to Gujarat,'' he said.

    The trust is one of the oldest in Mumbai, dating back to nearly 200
years ago. It also represents the Godeji Parshavnath Jain Temple and
Charities which is 80 years old. The trusts have now sent out letters to all
the other trusts informing them about the Supreme Court verdict. "We are
seeking legal advice and if the commissioner refuses to refund the money we
shall challenge the matter in court,'' he said.

    In Maharashtra, there are around 4.38 lakh registered charitable trusts
and in Mumbai, there are around 88,000 such trusts of which around 3,000
belong to the Jain community.

    The need to pay cess was challenged by the Salvation Army, Western India
territory and the Shri Lohana Maha Parishad, a public trust in a writ
petition. It was upheld by the court which said that any levy after 1970
should be related with the services taking into consideration the existence
of the surplus fund, not immediately required for further expenditure by way
of services including capital expenditure. It declared the levy at the rate
of 2% of the annual gross income of the trusts, was converted into tax after
March 31, 1970 and without the authority of the law.

    A J Dholakia, charity commissioner, said he was unaware of any such
order. "When the trusts file their annual audit reports, they also deposit
the contribution money. If the money paid is inadequate, we send them a
demand notice. Besides, this money is collected by us on behalf of the
government under the Public

Trust Act. So it is up to the government to inform us not to accept the
money,'' he said.

    According to information obtained by Shah under the RTI, the charity
commissioner's office has excess funds to the tune of Rs 234 crore, of which
Rs 155 crore has been placed in fixed deposits. It receives an annual
interest of Rs 9 crore on these deposits while its annual expenditure is
around Rs 9.29 crore. Besides, it also collects annual contribution from
trusts to the tune of Rs 20 crore.

    Dholakia is confident that a situation would not arise where the trusts
would stop paying the contribution to the charity commissioner's office.

    clara.lewis@timesgroup.com


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