Payment of ‘contribution’ to the Charity Commissioner (Maharashtra)

It is now sixteen years since Trusts and Societies registered in the State of Maharashtra have not been paying annual ‘contribution’ to the office Charity Commissioner (for the upkeep of the department) and hence most seem to have virtually forgotten about it. The collective memory of religious and charitable trusts and societies registered in the state of Maharashtra has now been refreshed with the Bombay High Court on 16^th July 2025 lifting the stay order on collection of this ‘contribution’ under interim orders dated 27^th February 2008 and 25^th September 2009.

Position under law

According to Section 58 of the Maharashtra Public Trusts Act 1950, “Every public trust shall pay to the Public Trusts Administration Fund annually such contribution at a rate or rates not exceeding five per cent of the gross annual income, or of the gross annual collection or receipt, as the case may be, as may be notified, from time to time, by the State Government.”

Under existing Rule 32, public trusts exclusively for secular education, medical relief, veterinary treatment of animals, relief of distress caused by natural calamity are exempt from payment of contribution under sections 57 & 58 of the Maharashtra Public Trusts Act 1950. In the case of trusts with multi-purpose objects and activities, deductions are allowed for the portion of the gross income or collection or receipt spent for any one or more of the aforesaid purposes.

Deductions are also allowed for donations received from other public trusts within the state and grants received from government and/or local authorities.

Five or two percent?

The power of the Charity Commissioner’s office to collect ‘contribution’ was first challenged by the Salvation Army Western India Territory, Bombay, and Lohana Mahajan Trust, Bombay, and the matter went to the Mumbai High Court and was decided on 21^st February 1972. Their Lordships of the Mumbai High Court observed that the levy of contribution by the charity commissioner’s office in the past was more than required to meet with the expenses of the Charity Commissioner’s office. Their Lordships therefore held the said contribution as tax and ultra vires, since the state government had no authority to levy tax.

The state of Maharashtra and the Charity Commissioner, thereupon filed an appeal before the Supreme Court of India, being Civil Appeal no 487 of 1973. The same was decided on 10^th February 1975 and their Lordships of the Supreme Court of India were pleased to allow the appeal partly and held that the levy of contribution was legal and valid up to 31^st March 1970, but ultra vires thereafter.

Their Lordships observed that the levy of contribution should have correlation with the services rendered (by the office of the charity commissioner), giving due consideration to the existence of the surplus funds which were not immediately required for further expenditure by way of service, calculating capital expenditure. In other words, the Supreme Court directed that a contribution which is charged should be in keeping with the expenditure made for the maintenance of the organization.

It was due to this litigation then pending that no contribution was charged for the period of three years and eight months, viz., from 1^st April 1970 to 14^th December 1973. During this period of three years and eight months, the funds were almost exhausted. Thereafter, two per cent (instead of five per cent) contribution was charged.

Stay order of 2009

Years after the order of the Supreme Court and in the wake of the then newly enacted Right to Information Act (RTI) 2005 some public-spirited persons, managed to obtain valuable facts and figures from the office of the Charity Commissioner under an RTI application.

According to the data then provided by the Office of the Charity Commissioner (Maharashtra State) it was observed that contributions collected over the years from various public charitable and religious trusts, for the ‘Public Trusts Administration Fund’ had been invested in Fixed Deposits of various Banks aggregating Rs. 155,47,83,162.00 (as on March 2006). The return on this investment was Rs. 8,73,92,316.00.

Based on the information received a view was taken that between the Financial Years 1996-97 to 2005-06 the Office of the Charity Commissioner had collected ‘excess contribution’ (i.e. levy of contribution beyond the expenditure incurred by the Office) to the tune of Rs. 165,15,61,770.22. The interest income on this ‘excess contribution’ alone was to the tune of Rs. 69,30,20.912.59.

On the other hand, the Office of the Charity Commissioner at that point in time had annual office expenditure amounting to Rs.9,29,44,893.00 and it was felt that the interest and other income alone was sufficient to meet expenses of the Charity Commissioner’s Office. Any shortfall could easily be made up from the surplus funds.

Taking cue from the earlier judgment of the Supreme Court, a writ petition was filed once again before the Bombay High Court (PIL 40/2007) to decide whether the contribution collected by the charity commissioner was legal and whether it should be stopped. Two more petitions (1780 and 1864 of 2007) were also filed in the same matter by two different trusts and all the cases were then clubbed together.

Why stay order was granted?

According to the affidavit filed by the State Government and Charity Commissioner before the High Court in the PIL, an amount of Rs.248 crores was lying with the Charity Commissioner in the fund. On questions asked by the High Court about the proposed expense from the said fund, the State Government and the Charity Commissioner could not file any explanation despite repeated opportunities given to both.

After passing strictures on the administration of State Government and office of Charity Commissioner, the Mumbai High Court passed an interim order on 25^th September 2009, restraining Charity Commissioner from collecting any fee hence forth in the State until further orders in the matter.

The Court noted availability of sufficient fund lying with the Charity Commissioner to meet its expenses and restrained the State Government of Maharashtra from collecting any amount from the Trusts towards the Fund. However, liberty was granted to the Charity Commissioner to utilise the Fund already lying with its office with further liberty to move application in the event of necessity for additional Funds.

State’s submissions before the High Court

Submission was made to the High Court that the expenses incurred by the State to keep the office of the Charity Commissioner operational for rendering services as contemplated under the Act, right from the date the order of injunction became operative is Rs.492,27,79,308/-.

It was also submitted that the State Government has accorded sanctions for the construction of regional offices as also for other proposals such as computers, annual maintenance etc. The total amount required for the approved purposes, presently, is Rs.40,78,38,304/-, out of which Rs.18,68,48,592/- is already paid. The remaining amount of Rs.22,09,89,712/- is to be paid from the Public Trusts Administration Fund.

The learned Advocate General for the State also argued that since substantial time has elapsed after filing of the present Petitions and particularly after passing of the interim order dated 25^th September 2009, liberty deserves to be granted to the State Government to review the position relating to compulsory contributions from Trusts by taking into consideration the prevailing circumstances.

Accordingly, the court observed that the interim stay on contributions was granted in the wake of excess contributions already available with the Charity Commissioner. From the Motions filed by the Charity Commissioner, it appeared to the court that the balance in the fund has substantially eroded and the salaries and expenditure of the Charity Commission organization are required to be borne by the State Government. “This situation cannot be continued forever,” it was noted.

Payment of contribution is mandatory

The court noted that there is no challenge to the provisions of Sections 57 and 58 of the Maharashtra Public trust Act in the present Petitions. The source of power of the State Government to levy contributions from trusts was not disputed.

The court came to the conclusion that the interim order dated 25^th September 2009 was passed on account of the situation which existed at that time when excessive funds were available with the office of the Charity Commissioner.

According to the Bombay High Court, “Since a period of more than sixteen years has passed since imposing of embargo on collection of contributions, in our view liberty needs to be given to the State Government to reassess the situation and make fresh order under Section 58(4) of the Maharashtra Public Trusts Act, if and when necessary.”

High Court’s order

i) The State Government and Charity Commissioner shall stand restrained from levying and/or collecting any contributions to the Fund based on the orders challenged in the Petitions or based on any previous orders.

ii) State Government shall however have the liberty to assess the current factual situation based on the parameters set out under Section 58 of the Maharashtra Public Trusts Act to pass appropriate orders pertaining to levy of contributions from the Trusts to the Fund.

iii) Needless to observe that if Petitioners feel aggrieved by any such order(s) passed by the State Government, they shall be at liberty to challenge the same.

CAP’s observations

1. Payment of contribution to the charity commissioner cannot be wished away. Payment of contribution is mandated under section 58 of the Maharashtra Public Trusts Act 1950.
2. The Bombay High Court had granted interim relief since the year 2009 because excessive funds were available with the office of the charity commissioner.
3. The Bombay High Court has now taken the view that “liberty needs to be given to the State Government to reassess the situation and make fresh order under Section 58(4) of the Maharashtra Public Trusts Act, if and when necessary.”
4. Let us now await official notification from the office of the charity commissioner with regard to payment of the contribution.
5. One hopes that the State Government will exercise prudence and not burden charities with a higher rate of contribution or worse, levy the same with retrospective effect.
6. Since the stay order on levy of the contribution has been lifted on 16^th July 2025, it is likely that the charity commissioner’s office may levy the same for the Financial Year 2025-26.
7. Trusts and Societies registered in Maharashtra State are advised to make provision for payment of contribution once the Notification is issued by the Office of the Charity Commissioner.
8. The Bombay High Court has clearly stated that if the “petitioners feel aggrieved by any such order(s) passed by the State Government, they shall be at liberty to challenge the same.”