(1)The State Government may as soon as possible and thereafter on the expiration of every five years, constitute a Finance commission in the prescribed manner to review the financial position of the Gram Panchayats, Panchayat Samitis and Zila Parishads and to give advice and make recommendations to the Government on financial matters, which will make recommendations on the following matters -(a)The Principles which should govern -(i)The distribution between the State and the Zila Parishads, Panchayat Samitis and Gram Panchayat of the net proceeds of the taxes, duties, tolls and fees be leviable by the Government and distribution among the Zila Parishads, Panchayat Samitis and Gram Panchayats of such proceeds proportionately;(ii)The determination of the taxes, duties and fees which may be assigned to or appropriated by the Zila Parishads, Panchayat Samitis and Gram Panchayats;(iii)The Grants-in-aid to Zila Parishads, Panchayat Samites and Gram Panchayats from the consolidated fund of the State;(b)The measures needed to improve the financial position of the Zila Parishads, Panchayat Samitis and Gram Panchayats;(c)Any other matter referred to the financial commission by the Governor in the interest of sound finance of the Zila Parishads, Panchayat Samitis and Gram Panchayats;(2)The Finance Commission shall consist of a Chairman and two other members;(3)The Chairman and members of the Finance Commission shall possess such qualification and shall be appointed in such manner as may be prescribed by the Government;(4)The Finance Commission shall determine its own procedure;(5)The Chairman or a member of the Finance Commission may resign his office by writing under his hand and addressed to the Finance Secretary to the Government, but he shall continue in office until his resignation is accepted by the Government;(6)The caused vacancy caused by the resignations of the member or Chairman under sub-section 5 or other wise may be filled by fresh appointment and a member or Chairman so appointed shall hold office for the remaining period for which the member or Chairman, in whose place he was appointed, would have held the office.(7)The Commission shall have the following powers in the performance of its functions; namely(a)To call for any record from any officer or Authority;(b)To summon any person to give evidence or to produce records; and(c)Such other powers as may be prescribed.(8)The Governor shall cause every recommendation made by the Finance Commission under this section, together with an explanatory memorandum as to the action taken thereon, to be laid before the Legislative Assembly.Chapter - XII Penalty
