Apex court upholds Aadhaar-PAN linkage, but exempts those without Aadhaar for now

Priya sundarajan | | Updated on: Jun 09, 2017
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PAN cardholders who already have an Aadhaar card should link both, says the court.

The Supreme Court on Friday upheld the validity of linking Aadhaar with Permanent Account Number (PAN). However, it exempted those who do not have Aadhaar from mandatorily getting one till it decides on whether it is a violation of privacy.

The court issued a “partial stay” on the implementation of Section 139AA of the Income Tax Act, which makes the possession of Aadhaar card necessary on or after July 1, 2017 for the continuing validity of an existing PAN and filing income tax returns.

A Bench of Justices A.K. Sikri and Ashok Bhushan exempted citizens without Aadhaar card from the ambit of Section 139AA.

The court also exempted those who have enrolled for Aadhaar but not got hold of one from the provision’s ambit.

Advising Parliament to “tone down” Section 139AA, the court said invalidation of PANs and restricting people from filing income tax returns would have “very severe consequences”.

Both these categories of persons - those who do not have Aadhaar and those who have enrolled but not got possession of Aadhaar - can continue to file their income tax returns. Their PAN will continue to be valid till a Constitution Bench of the Supreme Court decides on the pending question whether Aadhaar scheme itself is a violation of the right to privacy under Article 21 of the Constitution.

This judgment may thus act as an impetus for the government to push the Supreme Court to set up a Constitution Bench and decide early on the issue whether Aadhaar violates Article 21 and privacy.

The issue was referred to a Constitution Bench in 2015 and is still hanging fire.

The Bench, however, said that citizens who already have Aadhaar will have to link the same with their PAN. Over 95% of the population - 115 crore - already have Aadhaar.

The court said that Section 139AA will not have any retrospective effect or affect past income transactions. In short, this means that those who have already filed their income tax returns will not be touched.

The court rejected the contentions of the petitioners that Section 139AA is discriminatory and an unreasonable restriction on the right to profession and trade.

Noting that the government’s objective to introduce Section 139AA is laudable and is meant to end the scourge of fake PANs, Justice Sikri said the provision was neither discriminatory nor an unreasonable restriction.

The court also rejected arguments that linking of PAN and Aadhaar should be voluntary. It said there was no conflict between Section 139AA and the Aadhaar Act.

The court warned the government against the data leakage of Aadhaar and biometric details. It said there should be “no chance” of such leakage either from UIDAI or the officialdom or contractors.

“A proper scheme has to be devised at the earliest,” the court observed.

The government had justified the linkage as a measure to combat fake PANS and ration cards that have flooded the market and jinxed financial transactions. Attorney General Mukul Rohatgi had argued that it was already a mandatory requirement under Section 139A of the Income Tax Act to allot PAN. Aadhaar was only being linked to it.

Rohatgi had argued that taking fingerprints and iris impressions for Aadhaar was not an invasion of a citizen’s body as the right of a person to his own body was not absolute.

He had defended the legality of Section 139AA, saying if one has to live in a collective called the ‘State’, one has to submit to its laws.

The government had argued that the mandatory linking of Aadhaar with PAN cannot be considered discriminatory merely because there are ‘conscientious objectors’ who refuse to take the Aadhaar in the name of freedom of choice, privacy and fundamental rights enshrined in the Constitution.

The petitioners argued that the Indian Constitution was not a charter of servitude and “we are independent citizens who cannot be forced by the State to part with our fingerprints in exchange for being able to file our Income Tax returns”.

Senior advocates Shyam Divan, Arvind Datar and advocates Sriram Parakkat and Vishnu Shankar argued for the petitioners, contending that the linking of Aadhaarwith PAN was a “Faustian bargain”. The linkage of Aadhaar with essential activities of life, like opening a bank account, filing returns, buying property or a vehicle, would turn the “entire nation into one large concentration camp where citizens are under State surveillance 24/7”

Published on January 12, 2018

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