The Money-Finance Bill Controversy in the Constituent Assembly Debates


The Finance Bill, 2017 seeks to amend  40 acts on income tax raid procedures, anonymity in political funding, mandatory linking of Aadhaar to the PAN card and the composition and functioning of tribunals. Mr. Arun Jaitley, the Finance Minister, justifies these amendments as they are merely ‘incidental’ and minor changes to achieve the objectives of the Finance Bill, ‘non-tax’ matters permitted by Article 110.


Opposition political parties have described the Bill as “colourable legislation” that subverts the provisions of constitution. Mr. Jairam Ramesh has challenged the constitutionality of this Bill. Mr. Venkatesh Nayak argues that if the Speaker certifies the Finance Bill, 2017 as Money Bill that would result in “grave constitutional impropriety”.


The debates in the Constituent Assembly on draft Article 90 (now Article 110) anticipate future controversy. Two failed amendments deserve attention: the attempt to define a Money Bill and to clarify the relationship between a Money Bill and the Finance Bill.


K.T Shah, on May 20, 1949 , moved an amendment to add the words `duty, charge, rate, levy or any other form of revenue, income or receipt by Governments’ to draft Article 90(now Article 110).  He was concerned that the word ‘tax’ may be too narrowly construed by lawyers. The other forms of income or public revenue would therefore, be excluded. Ironically he pressed for a more elaborate provision that would have in the contemporary time supported the view of the government. However, this amendment was rejected and Article 110, inter alia, provides for imposition, abolition, remission, alteration or regulation of any tax.


On the same day, H.V Kamath,  had moved an amendment to ensure that both Money Bills and Finance Bills were exempted from the requirement of a joint sitting in case of resolving any deadlocks between the two houses over the passing of a bill. However, he withdrew the amendment when M. Ananthasayanam Ayyangar explained the difference between the procedures pertaining to the two bills. He pointed out that a Financial Bill is termed as a Money Bill if it contains provisions exclusively listed in draft Article 90 (now Article 110). He also argued that the Speaker’s ruling shall be final in determining whether a Bill is Money Bill or not. While HV Kamath’s amendment sought to preserve the primacy of the Lok Sabha on financial matters, the debate clarifies that the Finance Bill must stay within the definitional parameters of a Money Bill.


Therefore, as per the Constituent Assembly Debates, a Finance Bill that was not specifically covered under clauses (a)- (f) of draft Article 90 (now Article 110) was like any other ordinary bill. This would ensure that it would be treated as any other bill. In case of a deadlock, both houses could be called for a joint sitting. In clarifying this distinction between a Finance Bill and a Money Bill, Mr. Ayyangar perhaps anticipated that governments with full majorities in the Lok Sabha could misuse the instrument of money bills to push through controversial amendments.


(Diksha  Sanyal was with Centre for Law and Policy Research when she contributed the first version of this post)