constituent assembly of india debates (proceedings)- volume vii

74. In the meantime we make the following recommendations:--
(a) The existing practice should continue in respect of trading operations of the Central
Government, i.e., no income-tax should be levied on the profits. It should be open to the
Centre, however, to levy a contribution, as in the case of Railways, for its sole benefit from
such operations. If the trading is carried on by a separate juristic person, tax will be levied
even if the Government is the dominant shareholder.
(b) Tax should be levied on the trading operations of Units (as also of local bodies),
whether carried on within or without their jurisdiction; and the tax or the contribution in
lieu thereof should be treated as ordinary income-tax revenue for the purpose of the
divisible pool. We presume that if there are no profits, there will be no contribution; but if
this presumption is wrong, we suggest that the contribution should be treated as part of
the divisible pool of income-tax.
(c) We recommend that quasi-trading operations incidental to the ordinary functions of
Government such as the sale of timber by the forest department or of jail products by the
jail department should not be treated as trading operations for this purpose.
Emergency Provisions
75. The needs of the Centre in times of emergency, such as war or large scale internal disorder,
cannot be provided for through the detailed allocation of heads of revenue or of shares therein. It is
obviously not possible to legislate how emergencies should be met. We would suggest that there should
be a special provision in the Constitution authorising the President in an emergency to suspend or vary
the financial provisions in such manner as he may think best in the circumstances. For example, if there
is a war and an Excess Profits Tax is levied, it might be necessary for the Centre to retain the whole of
this tax for itself.
Procedure in Financial Matters
76. Item X of our terms of reference is as follows:--
"Is it necessary to make any modifications in the existing provisions as regards procedure in financial
matters contained in Sections 33 to 37 and 78 to 83 of the Government of India Act, 1935?"
77. The present financial procedure in the federal sphere is laid down in sections 33--37 of the
Government of India Act, 1935. The corresponding clauses in the Draft Constitution as prepared by the
Secretariat of the Constituent Assembly are 74, 75 and 77--81. We have two recommendations to
make:--
(1) When a money bill is sent from the Lower House to the Upper, a
certificate of the Speaker of the Lower House saying that it is a money bill
should be attached to, or endorsed on, the bill and a provision to that effect
should be made in the Constitution on the lines of the corresponding
provision in the Parliament Act, 1911. This will prevent controversies about
the matter outside the Lower House.
(2) After clause 80, a provision may be made making it necessary for
Government to approach the Legislature for regularising any excess
expenditure that might be discovered in audit after the close of the year.