In what would greatly aid the government’s efforts to ascribe a secure and robust unique ID to every citizen and use it for governance and targeted delivery of assorted doles and services, the Supreme Court on Friday upheld the validity of a recently inserted Income Tax Act provision, making Aadhaar mandatory to apply for PAN cards and file of tax returns. Even as the court upheld Parliament’s legislative competence to enact the relevant Section 139AA of the I-T Act — which was inserted through the Finance Act, 2017 — it allowed those who do not have the unique ID to file their income tax returns till the larger issue of right to privacy and concerns that the Aadhaar scheme affected the human dignity are decided by a Constitution bench. Noting that the government’s objective to introduce Section 139AA is laudable and meant to end the scourge of fake PANs, a bench comprising justices AK Sikri and Ashok Bhushan rejected the contentions of the petitioners that Section 139AA is discriminatory and an unreasonable restriction on the right to profession and trade. Welcoming the decision, attorney general Mukul Rohatgi said: “Our stand is vindicated.” Nearly 1.1 billion Indians already have an Aadhaar ID. What the court’s latest decision would mean that citizens who already have Aadhaar will have to link the same with their PAN by July 1 to keep the latter valid. However, those who don’t have Aadhaar and those who have enrolled but have not got possession of the ID won’t find their PAN cards cancelled at least till the Constitutional (Article 21) issue is resolved by the court. The court said that Section 139AA will not have any retrospective effect or affect past income transactions. It said previous transactions would not be affected or nullified with the partial stay on the new law till privacy issue linked to Aadhaar was decided. However, advising Parliament to “tone down” Section 139AA, the apex court said invalidation of PANs and restricting people from filing income tax returns would have “very severe consequences”.
It said the I-T Act provision was valid subject to the outcome of the batch of petitions before its Constitution bench. The bench also asked the government to take appropriate steps to ensure there was no leakage of data from the Aadhaar scheme. In fact, on this issue, the court was rather stern: It said there should be “no chance” of such leakage either from UIDAI or the officialdom or contractors. “The government to take proper and appropriate steps and the scheme in this regard has to be devised at the earliest till confidence among the citizens that the data would not be leaked,” Sikri said, while observing that there is no conflict between the impugned provisions of the I-T Act and the Aadhaar Act. Rohatgi had contended that Aadhaar was made mandatory for allotment of PAN to weed out fake cards that were used for terror financing and circulation of black money. Rohatgi had said that with the implementation of Aadhaar, the government had saved over Rs 50,000 crore on various schemes to benefit the poor as well as pension schemes. The Centre had also told the court that fake PAN cards were being used to “divert funds” to shell companies.
In September 2013, the SC said that Aadhaar was not mandatory to avail of benefits from government programmes and restricted its use to PDS and LPG scheme. In October 2015, a five-judge Constitution bench extended the use of Aadhaar to MGNREGA, Jan Dhan Yojana, pensions and the EPF schemes. The petitioners, including CPI leader Binoy Viswam, had contended that the Centre cannot “belittle” the apex court’s 2015 order holding the unique identification number as voluntary. They had argued that government should not have inserted Section 139AA in the Act to make Aadhaar mandatory for PAN as the apex court’s five-judge bench order was clear that Aadhaar was voluntary and not mandatory. Critics say that the Aadhaar system, which creates the world’s largest database of biometrics, does not have enough checks against leaks and can also allow the government illicit and intrusive digital surveillance and profiling of individuals. The Aadhaar database scheme, started in 2009, was set up to streamline payment of benefits and cut down on massive wastage and fraud.