Judgment

SHAH, J.:- The Madras Religious and Charitable Endowments Act 19 of 1951 was enacted to provide for the better administration and governance of Hindu Religious and Charitable Institutions and Endowments in the State of Madras. This Court in The Commissioner of Hindu Religious and Charitable Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, 1954 SCR 1005 held that Sections 21, 30 (2), 31, 55, 56 and 63 to 69 of Act 19 of 1951 were ultra vires, in that they infringed the guarantee of the fundamental rights in Articles 19 (1) (f), 25 and 26 of the Constitution of India. This Court also held that Section 76 (1) providing for imposing liability for payment of contribution which was of the nature of a tax and not a fee, was beyond the legislative competence of the State Legislature.

2. The Legislature then amended the Act by Madras Act 27 of 1954. On August 11, 1955, the Government of Madras framed Rules under the Act prescribing a graduated scale of rates of contribution under Section 76 (1).

3. The respondents who are trustees of the Venkataramana Temple at Mulki, District South Kanara, moved a petition in the High Court of Madras for an order restraining the Commissioner of Hindu Religious and Charitable Endowments from enforcing the provisions of the Amending Act 27 of 1954. Under the scheme of reorganisation of State of Madras, the petition was transferred for trial to the High Court of Mysore. The High Court of Mysore by order dated March 10, 1959, held that Sections 21, 30 (2), 31, 63 to 69 and 89 as amended by Act 27 of 1954 were invalid: Devraja Shenoy v. State of Mysore, (1960) 38 Mys LJ 245.

4. The Assistant Commissioner of Religious Endowments Mysore, issued on September 30, 1959 directing the respondent to pay the arrears of contributions and audit fee under the Commissioner s demand notice dated June 25, 1957. The respondents moved another petition in the High Court of Mysore challenging the validity of the demand. The High Court upheld the plea on the ground that no rules had been framed under Section 100 of the Act, and therefore, the demand for levy of contribution was premature, and that audit fee demanded by the Commissioner was without determination under Section 76 (2) of the Act and was "on that account without competence or authority of law". With certificate granted by the High Court, the Commissioner of Hindu Religious & Charitable Endowments has preferred this appeal.

5. The provisions of the Act which are relevant may first be read:

Section 71. "(1) The trustee of every religious institution shall keep regular accounts of all receipts and disbursements.

(2) The accounts of every religious institution, the annual income of which as calculated for the purposes of Section 76 for the fasli year immediately preceding is not less than sixty thousand rupees, shall be subject to concurrent audit, that is to say, the audit shall take place as and when expenditure is incurred.

(3) xx xx xx xx

(4) The audit shall be made-

(a) in the case of a religious institution the annual income of which calculated as aforesaid for the fasli year immediately preceding is not less than one thousand rupees, by auditors appointed in the prescribed manner, x x x x

(b) xx xx xx xx"

Section 76. "(1) In respect of the services rendered by the Government and their officers and for defraying the expenses incurred on account of such services every religious institution shall, from the income derived by it, pay to the Commissioner annually such contribution not exceeding five per centum of its income as may be prescribed.

(2) Every religious institution, the annual income of which, for the fasli year immediately preceding as calculated for the purposes of the levy of contribution under sub-section (1), is not less than one thousand rupees, shall pay to the Commissioner annually, for meeting the cost of auditing its accounts, such further sum not exceeding one and a half per centum of its income as the Commissioner may det