17/07/2019 - Indian Polity | GS II | G.S II - Polity | Mainstorming

IAS Parliament 5 years

KEY POINTS

· The rules of procedure of the Lok Sabha refer to the Finance Bill as a Bill which is introduced each year to give effect to the financial proposals of the government for the next financial year.

· It ordinarily contains the details of the changes in the tax rates and other consequential changes in the tax laws of the country.

· However, the Finance Bill of 2019, in addition to amending the tax laws, also amends several other laws unrelated to taxation in the country.

· For example, it amends the Reserve Bank of India Act, the National Housing Bank Act and the Insurance Act to change the net worth requirements of non-banking finance companies, housing finance companies and foreign insurance companies engaged in reinsurance.

· In addition, it proposes amendments to enable RBI to take measures for the management of NBFCs.

· The 2017 Finance Bill, changed the composition of 19 tribunals such as the Securities Appellate Tribunal, the Telecom Disputes Settlement and Appellate Tribunal, the National Green Tribunal and repealed seven other authorities including the Competition Appellate Tribunal.

· The Finance Bill, 2018, had 218 clauses, half of which were matters unrelated to the imposition of taxes.

· The Finance Bill, which falls in the category of a Money Bill, does not go through a similar process. For one, it is the exclusive preserve of the Lok Sabha.

· The Rajya Sabha can only make suggestions for amending the Finance Bill.

· Also, its suggestions are not binding on the Lok Sabha. In addition, Finance Bills do not go through the detailed scrutiny of a Parliamentary Standing Committee.

· Which means that if a Finance Bill contains provisions other than those related to taxation they escape the scrutiny process of Parliament.

· Structural changes in our legal system, which are unrelated to taxation, should only be done through the established mechanism of scrutiny and deliberation by both houses of Parliament.

· Bypassing of this process results in such changes getting embroiled in litigation. Currently, the Supreme Court is hearing several petitions that question the constitutional validity of changes made to the structure and composition of tribunals as was done by the Finance Bill, 2017.

· More importantly, when substantive structural and regulatory changes to laws are included in the Finance Bill, it sets a bad precedent and undermines the role of Parliament in ensuring that the lawmaking process is rigorous as well as consultative.