Supreme Court strikes down amended Finance Act rules for tribunals

News:The Supreme Court has struck down the rules formulated by the Centre on appointment and service conditions for members of various tribunals and referred to a larger bench the issue of examining the validity of the passage of the Finance Act 2017 as a Money Bill.


Finance act on Tribunals:

  • The Finance Act,2017 had modified the terms of appointment and functioning in various statutory tribunals including the National Green Tribunal.
  • However,the Supreme Court has struck down the rules under Section 184 of the Finance Act,2017.
  • The court said that changing the governance of tribunal through rules is contrary to the doctrine of Separation of Powers and past judgements of the SC.
  • In 2014,the Supreme Court while examining the provisions related to the National Tax Tribunal had held that Appellate tribunals have powers and functions similar to that of High Courts.
  • Therefore,matters related to the appointment and reappointment of their members must be free from executive involvement.
  • Further,the apex court has also directed the government to reformulate the rules.

Finance act as a Money bill:

  • The challenge to the Finance Act, 2017 was also on the grounds that it was passed as a Money Bill.
  • The petitioners had argued that the finance act was not a money bill as it contained provisions concerning the functioning of tribunals and passing it as a money bill was done to circumvent the Rajya Sabha.
  • However,the apex court has referred this matter to a larger bench for consideration.

Additional information:

About Tribunals:

  • Tribunals are special court to deal with specific matters or problems of a particular type.
  • They were added in the Constitution by the Constitution (Forty second Amendment) Act,1976 as Part XIV-A.
  • Article 323-A deals with Administrative Tribunals while article 323-B deals with tribunals for other matters.

About Money Bill:

  • A money bill is defined under Article 110 of the Indian Constitution.
  • A Bill is said to be a Money Bill if it only contains provisions related to taxation, borrowing of money by the government,expenditure from or receipt to the Consolidated Fund of India.Bills that only contain provisions that are incidental to these matters would also be regarded as Money Bills.
  • The Speaker certifies a Bill as a Money Bill and the Speaker’s decision is final.
  • A Money Bill can be introduced in Lok Sabha on the recommendation of the President.It must be passed in the Lok Sabha by a simple majority of all members present and voting.
  • Following this, it may be sent to the Rajya Sabha for recommendations, which Lok Sabha may reject if it chooses to.If such recommendations are not given within 14 days,it will be deemed to be passed by Parliament.