Finance Bill, 2017: Turning the Constitution on its Head

Last month, Pankhuri had reported on how the Copyright Board is set to be merged with IPAB through an amendment to the Copyright Act through the Finance Bill, 2017 (“Bill”) and raised the question as to how such a non-taxation proposal could have been brought through the Bill. In what should essentially have been legislated through an ordinary bill, with the assent of Rajya Sabha, the government decided to slip-in the amendments relating to a number of non-fiscal legislations into the Bill, including those related to the re-organisation of tribunals, electoral bonds and a slew of other amendments to ordinary legislations. Opposition members have expressed their strong concern as regards the Bill and pointed out that it is a backdoor mechanism through which the government is trying to evade the Rajya Sabha scrutiny.

Prashant had earlier, in a detailed post for scroll, analysed the effect of the finance bill by pointing out that it could lead to, among others, the government stripping Parliament of its powers in relation to the tribunals and consolidating those powers with itself. While a number of pieces has attempted to capture what all went wrong during this unprecedented legislative exercise, a lucid yet hard hitting take on the issue may be found here.

Rather than reiterating what has been already said elsewhere, in the course of this post, I look at the debate which ensued in the Lok Sabha prior to the passing of the Bill and the validity of the justification given by Mr. Jaitley to bring the impugned amendments within the scope of the Bill.

What amounts to ‘incidental’ for the purpose of Art.110?

The starting point for our discussion would be the protest that Mr. MK Premachandran, a member of one of the opposition parties, raised during the course of the debate (at internal page number 352). He starts off by citing Rule 219 of the Lok Sabha Rules of Procedure, which mentions that a finance bill is a bill meant to give effect to the financial proposals of the government for the upcoming year and is temporary in nature. Mr. Premachandran also reproduced the observations made by the first ever speaker of the Parliament, who had stated that no provisions except for those giving effect to the taxation proposals should be included in the finance bill unless it is absolutely consequential. He concludes by stating that the Bill is a backdoor legislation, purely devised to circumvent scrutiny by the standing committees. He strikes the nail on its head by pointing out that such clubbing of non-fiscal legislative provisions under a money bill would mean that there would be no requirement of a monsoon or winter sessions, during which legislative business outside of taxation proposals are carried out.

Primarily, the question that needs to be addressed here is whether the inclusion of 55 odd clauses, allegedly non-fiscal, in the Bill was a mere ruse to evade the scrutiny of the Rajya Sabha or were they actually “incidental” to one or the other matters covered by sub-clauses (a) to (f) of Article 110 and thus falling within the ambit of Art.110 (g). Briefly put, Art.110 explains what bills may fall under the category of money bills. As per it, if a bill contains only provisions containing any or all of the matters covered under sub-clauses (a) to (f) of Art.110, it shall be deemed to be a money bill. Sub-clauses (a) to (f) are matters squarely falling within the fiscal powers of the state and leave no scope for doubt as to what the provision intends to bring within its ambit. Nevertheless, sub-clause (g) has been provided to ensure that enough elbow room is available to the law makers while drafting a money bill and merely because an incidental provision, non-fiscal in nature, which is sine qua non for giving effect to the money bill forms part of the bill, it should not take the bill out of the realm of Art.110. Another feature that needs mentioning is that money bills can only be introduced in the Lok Sabha and Rajya Sabha does not have the power to prevent the passing of the bill and can only make recommendations, which the Lok Sabha may choose not to accept (Article 109).

Despite the obvious curbs on his powers to introduce non-incidental, non-fiscal proposals through the Bill, Mr. Jaitley put up a defence in this regard and some of the arguments were strange to say the least. He begins by quoting GV Mavalankar, who as a speaker of the House had ruled on the issue of what may amount to incidental in case of a money bill and goes on to substantiate how the provisions relating to tribunals fall within the ambit of a money bill. Following is the portion of Mavalankar’s ruling, which was quoted:

“If a Bill substantially deals with the imposition, abolition, etc., of a tax, then the mere fact of the inclusion in the Bill of other provisions which may be necessary for the administration of that tax or, I may say, necessary for the achievement of the objective of the particular Bill, cannot take away the Bill from the category of Money Bills. One has to look to the objective of the Bill. Therefore, if the substantial provisions of the Bill aim at imposition, abolition, etc., of any tax then the other provisions would be incidental and their inclusion cannot be said to take it away from the category of a Money Bill. Unless one construes the word ‘only’ in this way it might lead to make article 110 a nullity.”

After quoting Mavalankar, Mr.Jaitley goes on to substantiate (at internal page number 363) as to how the impugned proposals are incidental. The substantiation proceeds in such a way that it could be easily discerned that the primary concern being addressed is the need for uniformity in service conditions of the tribunal members and the need for streamlining the functioning of these tribunals. In the process of achieving the above, among many others (including clubbing the tribunals, providing for the age of the persons appointed to such tribunals), the issue of pay structure of the members is also included. Thus, in fact, it is the fiscal provisions which are incidental rather than the other way around. While there is no absolute clarity on what would amount to “incidental” for the purposes of Art.110, a plain reading of the provision would mean that anything supporting the main fiscal provision and which are absolutely consequential, should be saved by Article 110 (g). The following is how VN Shukla’s commentary on the Indian Constitution describes what shall fall within the ambit of incidental:

“What is an incidental matter is an issue of some controversy. But, the enacting formula, the commencement clause, the repeal clause and the clauses dealing with conclusion and determination, etc. and providing penalties, etc. may be treated as matters incidental thereto”. 

Thus, only those provisions, which are consequential and procedurally relevant for giving effect to the taxation proposal is envisaged as incidental for the purposes of Art.110.


While the obvious hindrance to challenging the validity of the Bill is Art.110 (3), which provides that the decision of the Speaker of the Lok Sabha shall be final as regards the question of whether a bill is a money bill or not Art.122 too provides that no court shall enquire into the validity of the proceedings of the Parliament. Nevertheless, an argument may be made that this is not merely a matter of violation of procedure but a gross irregularity or violation of the constitutional provision requiring the interference of courts. Either way, it is deeply disappointing that what could have been easily done through the ordinary course of legislation has been attempted to be done in the circuitous way.

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1 thought on “Finance Bill, 2017: Turning the Constitution on its Head”

  1. It’s a good idea to merge the Copyright Board with the IPAB, which itself has to be reconstituted. The Copyright Board was not an efficient institution. However, what was the problem in doing it in a proper constitutional way? To do it this way is wrong in principle, and anyway it wasn’t even a hot political issue for the Government to even have perceived any expediency in bypassing the upper house.

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