(1) The Finance Commission when constituted by the Government shall review the financial position of the municipalities and make recommendations to the Government as to––
(a) the principles which should govern––
(i) the distribution between the Government and the municipalities of the net proceeds of taxes, duties, tolls and fees leviable by the [Union territory of Jammu and Kashmir], which may be divided between them and the allocation between the municipalities at all levels of their respective shares of such proceeds ;
(ii) the determination of the taxes, duties, tolls and fees which may be assigned to, or appropriated by, the municipalities ;
(iii) the grants-in-aid to the municipalities from the Consolidated Fund of the [Union territory of Jammu and Kashmir] ;
(b) the measures needed to improve the financial position of the municipalities ; and
(c) any other matter referred to the Finance Commission by the Government in the interest of sound finances of the municipalities.
(2) The Government 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 Legislature of the State].