Decided on July 25,1974

UNION OF INDIA Respondents


- (1.) THESE appeals arise from a common judgment of P. Subramonian Poti J. in original petition Nos. 2412/ 71, 4915/ 71, 3440/ 73, 5053/ 71, 4102, 4716, 3746, 5972, 4075, 4070, 1694, 4705 and 4129 of 1971, 1629/72 and 4420 of 1971 by which S. 3 (g) and 46 of the Wakf Act, 1954 (for short the Act) as amended by the Wakf (Amendment) Act, 1969 have been declared to be violative of Art. 14 of the Constitution of India.
(2.) FOR the purpose of considering the questions raised, the petitioners before the learned judge agreed to treat original petition No. 2412/71 as typical of the petitions and rested their arguments on the basis of the facts stated in the affidavits and the petition, in that case. There were two petitioners in that petition who were interested in the B schedule properties in the will executed by late Abdul Sathar Hajee Moosa Sait on 25 21099. Those properties formed the properties of the Dharmasthapanam described as the Abdul Sathar Hajee Moosa Sait Dharmasthapanam. The wakf created for charitable and religious purposes by the same testament had A schedule properties set apart for those purposes. Three main contentions were raised before the learned judge two of which the learned judge did not accept; and they were that S. 46 of the Act is an infringement of the right guaranteed by Art. 26 of the constitution, and that the obligation imposed by S. 46 called a fee was really a tax. An additional argument that the petitions were not maintainable as the petitioners could not be said to be aggrieved persons was also rejected by the learned Judge. But On the third main question whether S 3 (g) and S. 46 of the act as amended were violative of Art. 14 of the Constitution, the contentions of the petitioners were accepted and the sections were struck down. These appeals are taken by the Kerala Wakf Board which was the first respondent in the original petitions. The second respondent in the petitions was the Central Government. The contention raised on behalf of the appellants before us by the Advocate General was that S. 3 (g) and S. 46 of the Act as amended by the amending Act are not violative of Art. 14 of the constitution.
(3.) WE shall extract S. 3 (g) and 46 as they stood before the Act was amended by the Wakf (Amendment) Act, 1969 and as they are now after the Amendment. This court had to consider the meaning of the expression "the total income" in S. 3 (g) of the Act before it was amended in Ibrahim Hassam Sait v. Kerala Wakf Board 1964 KLT. 367. The answer given was what was stated by the Supreme Court in Navinchandra Mafatlal, Bombay v. Commissioner of Income Tax, Bombay City AIR. 1955 S. C. 58 that the word "income" in its ordinary, natural and grammatical meaning "embraces any profit or gain which is actually received. " it was therefore held by this court that cultivation expenses will have to be deducted in arriving at the "total income". The amendments effected to S. 3 (g)and 46 were clearly for the purpose of giving a different content to the definition of "net income" for the purpose of the Act. Though S. 3 (g)as amended defines "net annual income" and before the amendment, the definition was of "net income", this change does not materially alter the situation. But the amended definition speaks of "gross income from all sources in an year" excluding only: (1) land revenue, cess, rates and taxes payable to the Government or any local authority; and (ii) donations given or offerings made with a specific direction that they shall form part of the corpus of wakf; Provided that the interest or income, if any, accruing from such donations or offerings shall be taken into account in calculating the gross annual income;". There can be little doubt that by the amendment, the "net annual income" has come to mean something entirely different from the "net income" as defined before the amendment. The ground on which the levy has been held to be violative of Art. 14 by the learned judge is that the impost fell unevenly and inequitably on the different wakfs. It was noticed that wakfs owning agricultural properties may either cultivate such properties themselves or give those properties on lease. In the former case the gross income of the wakfs concerned will be very much higher, than the rental income of wakfs that have leased out the properties and such rental income will also be. the gross income and practically the "net income" in the sense of profits and gains. In the former case the fee under S. 46 is related to the gross income and in the latter to 'net income' understood as "profits and gains "and this is discriminatory. It was also suggested that in the cases of wakfs owning buildings and receiving rent income, the gross income will be the rent income and in such cases there will little or no expenses for earning rent income and the gross income may practically be the 'net income' meaning "profits and gains. " But in the case of agricultural property cultivated by the wakfs a large amount will have to be expended for cultivation expenses and the gross income will not be anything like the 'net income' as understood above and it was suggested that this resulted in a levy which fell unevenly on wakfs dissimilarly situated which have been uniformly subjected to the same obligation. The judge expressed himself thus: "therefore to take the gross receipts as deducted only by taxes and cess and the like as the basis for the levy of contribution would be to fix an arbitrary levy having differing incidence on different wakfs. In other words, so long as what is taxed is not what ultimately comes into the hands of the owner as net income and the levy is not a percentage of such net income, the incidence of the levy vary from person to person. " Reliance has been placed by the learned judge on the well known decisions in Kunnathat Thathunni Moopil Nair etc. v. State of Kerala and another, AIR. 1961 S. C. 552, M/s. East India Tobacco Co. , etc. v. State of andhra Pradesh & another AIR. 1962 S. C. 1733, The State of Andhra Pradesh & another v. Nalla Raja Reddy and others AIR. 1967 S. C. 1458, New Manek Chowk Spg. and Wvg. Mills Co. Ltd. etc. v. Municipal Corporation of the City of Ahmedabad and others AIR. 1967 S. C. 1801 and Sugra Bibi v. Hasi Kummu Mia AIR. 1969 S. C. 884.;

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