Across the Aisle: The intoxication of absolute power

The Finance Bill is, usually, the most important Bill on the annual legislative agenda of the finance minister. Policy decisions are first taken by the Department of Revenue with the approval of the finance minister and these decisions are conveyed to the draftsmen. Dozens of officers, including officers of the Ministry of Law, spend more than a hundred hours to draft the Finance Bill. Senior officers spend many hours poring over the draft to satisfy themselves that the policy decisions taken earlier have been accurately reflected in the Bill.

The buck for the policy decisions stops at the table of the finance minister. The buck for the drafting also should stop at the table of the finance minister, especially if he is also a person trained in law.

I have three issues concerning Finance Bill, 2017.

An assault on the constitution

A Finance Bill is, pre-eminently, a Money Bill under Article 110 of the Constitution of India (see box), but is Finance Bill, 2017, a Money Bill? I do not believe that Mr Arun Jaitley does not know the scope of and the limitations imposed by Article 110. Nor do I believe that Mr Jaitley thinks that the word “only” is otiose. Nor do I believe that he is unaware of the passages quoted by Mr Kapil Sibal in the course of the debate in the Rajya Sabha:

Erskine May had said: “A bill which contains any of the enumerated matters and nothing besides is indisputably a money bill. If it contains any other matters, then, unless these are subordinate matters incidental to any of the matters so contained in the bill, it is not a money bill.”

G V Mavalankar, the first Speaker, had ruled in 1956: “I would normally urge upon the Finance Minister, not only he, but also his successors to see that only those provisions which relate to the raising of taxations should be included in the Bill. The procedure should be followed, and no other provision should be given attention to unless it is absolutely consequential.”

Finance Bill, 2017, is an assault on Article 110 of the Constitution. 55 of the 189 clauses of the Finance Bill have nothing to do with taxation— clause (a) — or have any connection with any of the clauses (b) to (g) of sub-Article (1) of Article 110. Further, these 55 clauses are not consequential or incidental to the other clauses of the Finance Bill that are concerned with taxation. These suspect clauses have been smuggled into the Finance Bill by the Finance Minister against his legal conscience. The real purpose is to avoid scrutiny of the Bill by the Rajya Sabha. His comeuppance will be when the Supreme Court rules on what shall and what shall not be included in a Money Bill.

Tax terrorism
The assessee had one shield against arbitrary actions by tax officials: it was the requirement that the tax officer shall have “reason to believe” and shall record the reasons. The reasons must be disclosed to the assessee, the assessee may challenge the so-called reasons in a court of law, and if the court held that the reasons were non-existent, irrelevant or unjustified the court would quash the proceedings. Finance Bill, 2017, has changed the law. Clauses 50 and 51 have introduced an Explanation to Sections 132 and 132A of the Income-tax Act that reads:

“For the removal of doubts, it is hereby declared that the reason to believe, as recorded by the income-tax authority under this sub-section, shall not be disclosed to any person or any authority or the Appellate Tribunal.”

The Explanation is against settled law. The law is being ‘unsettled’ with retrospective effect from April 1, 1962, or October 1, 1975! If the assessee is not given the reasons, how will the assessee challenge the so-called reasons and ask the court to quash the proceedings? Why should the assessee go through proceedings up to the stage of the Income-tax Appellate Tribunal without having an effective opportunity to challenge the initiation of the proceedings? Clauses 50 and 51 are suspect and the battle will now move to the courts.

Political funding
I support the efforts to cleanse political funding. I welcome the idea of electoral bonds. Under the provisions of Finance Bill, 2017, a donor may purchase bonds and only the issuing bank(s) will know the name of the donor/purchaser. The donor can donate the bonds to one or more political parties but neither the donor nor the donee-political party is required to disclose the names in their returns! If the objective is transparency and clean political funding, why should the names of donors and donee-political parties be kept secret? Finance Bill, 2017, will promote money-laundering. Corporates and other donors should be warned: nothing will prevent a future government from amending the law and making public the names of all donors and donee-political parties.

Parliament is only one forum of debate. On the first two issues, the debate will move to the courts of law. On the third issue, the debate will move to public platforms. The last word has not been said on the three issues.

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