Kochi: Render therefore unto Caesar the things which are Caesar's; and unto God the things that are God's — Luke 20:25.
A Division Bench of the Kerala High Court had the above Bible verse in mind when it dismissed the pleas of several priests and nuns who had opposed Tax Deduction at Source on the salaries they had been receiving while working in government and aided educational institutions. The court thus upheld the decision of the Income Tax Department to deduct TDS.
The Bench pointed out that TDS was charged on the basis of salary earned, while ruling out concession on the basis of a person's status in society.
The Division Bench, consisting of S.V.Bhati and Bechu Kurian Thomas, dismissed the appeals filed by Sister Mary Lucitta and 48 others against a similar verdict pronounced earlier by the Single Bench of the High Court.
Interestingly, the judgment began with a quote from the Bible, 'Give Caesar what belongs to Caesar' to drive home the point that the TDS exemption could not be granted on the basis of religious freedom guaranteed under the Indian Constitution.
The court also said that the legal imposition of tax could not be construed as an infringement upon religious freedom.
The petitioners argued that the salary received by the members of the clergy became part of church property and the members of the clergy did not earn any money. But the Income Tax Department advanced the argument that the priests and nuns, who get salary and pension, are government servants and hence, to be liable to be paid tax. If they have any claim for tax rebate, they should apply for tax refund rather than seeking tax exemption, the Income Tax Department added.
'Civil death' theory not applicable
The court rejected the argument that the TDS exemption can be granted since the salary of priests and nuns go to the church's kitty and not to their personal account.
The court pointed out that the "civil death" concept found in the canon law is not applicable in all situations. The laws of the country definitely stand above personal laws. Just like ordinary citizens, the clergy also enjoys all legal and constitutional rights such as the right to freedom of speech and expression, right to travel and right to work.
The court said the resolutions passed in 1944 and 1977 did not support the facts of the case. The first circular in 1944 came into effect before the introduction of the Income Tax Act. The second circular in 1977 is applicable only to matters related to fees given by missionaries and it is not applicable to those who earn salary by working in government and aided institutions.
A benefit that was in vogue for more than 75 years
The members of the clergy, who had been working in government and aided institutions, were enjoying the benefit of tax exemption from tax from 1944, when the first circular on the matter came into vogue. In 2014, the Income Tax Department asked the State Treasuries to start collecting tax from priests and nuns, who are getting government salaries. But, the tax was not deducted from 2014 since the matter was pending in the High Court.
