The Finance Bill, 2017 is being discussed in Lok Sabha today. Generally, the Finance Bill is passed as a Money Bill since it gives effect to tax changes proposed in the Union Budget. A Money Bill is defined in Article 110 of the Constitution as one which only contains provisions related to taxation, borrowings by the government, or expenditure from Consolidated Fund of India. A Money Bill only needs the approval of Lok Sabha, and is sent to Rajya Sabha for its recommendations. It is deemed to be passed by Rajya Sabha if it does not pass the Bill within 14 calendar days.
In addition to tax changes, the Finance Bill, 2017 proposes to amend several laws such the Securities Exchange Board of India Act, 1992 and the Payment and Settlements Act, 2007 to make structural changes such as creating a payments regulator and changing the composition of the Securities Appellate Tribunal. This week, some amendments to the Finance Bill were circulated. We discuss the provisions of the Bill, and the proposed amendments.
Certain Tribunals to be replaced
Amendments to the Finance Bill seek to replace certain Tribunals and transfer their functions to existing Tribunals. The rationale behind replacing these Tribunals is unclear. For example, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) will replace the Airports Economic Regulatory Authority Appellate Tribunal. It is unclear if TDSAT, which primarily deals with issues related to telecom disputes, will have the expertise to adjudicate matters related to the pricing of airport services. Similarly, it is unclear if the National Company Law Appellate Tribunal, which will replace the Competition Appellate Tribunal, will have the expertise to deal with matters related to anti-competitive practices.
Terms of service of Tribunal members to be determined by central government
The amendments propose that the central government may make rules to provide for the terms of service including appointments, term of office, salaries and allowances, and removal for Chairpersons and other members of Tribunals, Appellate Tribunals and other authorities. The amendments also cap the age of retirement for Chairpersons and Vice-Chairpersons. Currently, these terms are specified in the laws establishing these Tribunals.
One may argue that allowing the government to determine the appointment, reappointment and removal of members could affect the independent functioning of the Tribunals. There could be conflict of interest if the government were to be a litigant before a Tribunal as well as determine the appointment of its members and presiding officers.
The Supreme Court in 2014, while examining a case related to the National Tax Tribunal, had held that Appellate Tribunals have similar powers and functions as that of High Courts, and hence matters related to their members’ appointment and reappointment must be free from executive involvement.[i] The list of Tribunals under this amendment includes several Tribunals before which the central government could be a party to disputes, such as those related to income tax, railways, administrative matters, and the armed forces Tribunal.
Note that a Bill to establish uniform conditions of service for the chairpersons and members of some Tribunals has been pending in Parliament since 2014.
Inclusion of technical members in the Securities Appellate Tribunal
The composition of the Securities Appellate Tribunal established under the SEBI Act is being changed by the Finance Bill. Currently, the Tribunal consists of a Presiding Officer and two other members appointed by the central government. This composition is to be changed to: a Presiding Officer, and a number of judicial and technical members, as notified by the central government.
Creation of a Payments Regulatory Board
Recently, the Ratan Watal Committee under the Finance Ministry had recommended creating a statutory Payments Regulatory Board to oversee the payments systems in light of increase in digital payments. The Finance Bill, 2017 seeks to give effect to this recommendation by creating a Payments Regulatory Board chaired by the RBI Governor and including members nominated by the central government. This Board will replace the existing Board for Regulation and Supervision of Payment and Settlement Systems.
Political funding
The Finance Bill, 2017 proposes to make changes related to how donations may be made to political parties, and maintaining the anonymity of donors.
Currently, for donations below Rs 20,000, details of donors do not have to be disclosed by political parties. Further, there are no restrictions on the amount of cash donations that may be received by political parties from a person. The Finance Bill has proposed to set this limit at Rs 2,000. The Bill also introduces a new mode of donating to political parties, i.e. through electoral bonds. These bonds will be issued by banks, which may be bought through cheque or electronic means. The only difference between cheque payment (above Rs 20,000) and electoral bonds may be that the identity of the donor will be anonymous in the case of electoral bonds.
Regarding donations by companies to political parties, the proposed amendments to the Finance Bill remove the: (i) existing limit of contributions that a company may make to political parties which currently is 7.5% of net profit of the last three financial years, (ii) requirement of a company to disclose the name of the parties to which a contribution has been made. In addition, the Bill also proposes that contributions to parties will have to be made only through a cheque, bank draft, electronic means, or any other instrument notified by the central government.
Aadhaar mandatory for PAN and Income Tax
Amendments to the Finance Bill, 2017 make it mandatory for every person to quote their Aadhaar number after July 1, 2017 when: (i) applying for a Permanent Account Number (PAN), or (ii) filing their Income Tax returns. Persons who do not have an Aadhaar will be required to quote their Aadhaar enrolment number indicating that an application to obtain Aadhaar has been filed.
Every person holding a PAN on July 1, 2017 will be required to provide the authorities with his Aadhaar number by a date and in a manner notified by the central government. Failure to provide this number would result in the PAN being invalidated.
The Finance Bill, 2017 is making structural changes to some laws. Parliamentary committees allow for a forum for detailed scrutiny, deliberations and public consultation on proposed laws. The opportunity to build rigour into the law-making process is lost if such legislative changes are not examined by committees
[i] Madras Bar Association vs. Union of India, Transfer Case No. 150 of 2006, Supreme Court of India, September 25, 2014 (para 89).
According to a recent press release, the Cabinet has approved a proposal to introduce a Bill in Parliament to amend the Indian Penal Code, 1860 (IPC). While the draft Bill is currently not available, its highlights are specified in the press release. As per the press release, the Bill aims to make rape laws gender neutral. The key features specified are:
Present Law According to section 375 of the IPC, an allegation of rape has to satisfy the following criteria:
This definition of rape does not include use of other body parts or foreign objects by the offender upon the victim’s body. Such offences are classified as “use of criminal force to outrage the modesty of a woman” (see here) and are punishable with two years imprisonment or fine or both. Rape, on the other hand, is punishable with imprisonment for seven years to a life term. Proposals to amend the law on rape Through an order in 1999, the Supreme Court had directed the Law Commission to review the law on rape (Sakshi vs. Union of India). The Law Commission had in its 172nd Report, dated March 25, 2000 made recommendations to amend the law to widen the definition of rape. In its report, the Commission had recommended that rape be substituted by sexual assault as an offence. Such assault included the use of any object for penetration. It further recognised that there was an increase in the incidence of sexual assaults against boys. The Report recommended the widening of the definition of rape to include circumstances where both men and women could be perpetrators and victims of sexual assault.[1] Amendments to the law on the basis of these recommendations are still awaited. The High Court of Delhi has recognised the need to amend the laws on rape. It observed that the law did not adequately safeguard victims against sexual assaults which were included by the Law Commission within the scope of rape. It was observed that the definition should be widened to include instances of sexual assault which may not satisfy the penile-vaginal penetration required under the existing law. The 2010 draft Criminal Laws Amendment Bill, released by the Ministry of Home Affairs, attempted to redefine rape. The draft provisions substitute the offence of rape with “sexual assault”. Sexual assault is defined as penetration of the vagina, the anus or urethra or mouth of any woman, by a man, with (i) any part of his body; or (ii) any object manipulated by such man under the following circumstances: (a) against the will of the woman; (b) without her consent; (c) under duress; (d) consent obtained by fraud; (e) consent obtained by reason of unsoundness of mind or intoxication; and (f) when the woman is below the age of 18. Variation between proposals The existing legal provisions, the Law Commission Report, the 2010 Bill and the recent press release are similar in that they provide an exception to marital rape. Under the law, un-consented sexual intercourse is not an offence if the wife is above a certain age. (Under the existing law the wife has to be over 16 years’ of age and as per press release she has to be more than 18 years old.) This is at variance with the proposal of the National Commission of Women (NCW). An amendment to the IPC recommended by the NCW deleted the exemption granted to un-consented sex between a man and his wife if she was more than 16 years old. It therefore criminalised marital rape. As per the press release, this exemption has been retained in the proposed Bill. Furthermore, as per the release, while the age of consent for sexual intercourse will be increased to 18 years, for the purpose of marital sex, the age of consent would be 16 years.
[1] Review of Rape Laws, Law Commission of India, 172nd Report, paragraph 3.1.2, "375. Sexual Assault: Sexual assault means - (a) penetrating the vagina (which term shall include the labia majora), the anus or urethra of any person with - i) any part of the body of another person or ii) an object manipulated by another person except where such penetration is carried out for proper hygienic or medical purposes; (b) manipulating any part of the body of another person so as to cause penetration of the vagina (which term shall include the labia majora), the anus or the urethra of the offender by any part of the other person's body; (c) introducing any part of the penis of a person into the mouth of another person; (d) engaging in cunnilingus or fellatio; or (e) continuing sexual assault as defined in clauses (a) to (d) above in circumstances falling under any of the six following descriptions: ... Exception: Sexual intercourse by a man with his own wife, the wife not being under sixteen years of age, is not sexual assault."
