SC upholds linking Aadhaar, PAN; partial stay on penalty

New Delhi: The Supreme Court on Friday upheld the validity of the law making Aadhaar mandatory for allotment of PAN card and filing of income-tax returns, but exempted those without it for now, until the larger privacy issue is decided by a Constitution bench.

In effect, those who possess an Aadhaar card must link it to their Permanent Account Number (PAN) card, but those who don’t have Aadhaar, or have enrolled but have not yet got it, need not. The court, for now, stayed the penalising provision that makes PAN cards not linked to Aadhaar cards invalid.

Section 139AA of the Income Tax Act, introduced by Finance Act, 2017, made quoting of Aadhaar or enrolment ID of Aadhaar application form for filing of income tax returns mandatory with effect from July 1 this year.

A bench of Justices A.K. Sikri and Ashok Bhushan said, “We are of the opinion that till Article 21 (concerning right to privacy) of the Constitution is decided by the Constitution bench, a partial stay is required (on Section 139AA of Income Tax Act).”

Challenging the introduction of Section 139AA in the Income Tax Act, the petitioners — Binoy Viswam, CPI national executive member and former Kerala minsiter, retired Major General S.G. Vombatkere and social activist Bezwada Wilson — had argued that the “draconian law”, which makes PAN card not linked to Aadhaar invalid, will impact an individual’s right to do business.

They also submitted that the Centre cannot “belittle” the apex court’s five-judge bench order of 2015, holding the UID number as voluntary, and not mandatory.

Attorney general Mukul Rohatgi had contended that Aadhaar was made mandatory for allotment of PAN to weed out fake cards that were being used for terror financing and circulation of black money.

Mr Rohatgi also 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 pensioners.  

The bench noted that a person whose PAN card is invalidated is bound to suffer immensely in his day to day dealings, a situation that should be avoided till the Constitution bench authoritatively determines the argument of Article 21 of the Constitution. In the interregnum, it said, Parliament could consider toning down the penalising provision itself.  

The main issue, as to whether the Aadhaar card scheme, whereby biometric data of an individual is collected, violates right to privacy and, therefore, is offensive of Article 21 of the Constitution is yet to be decided by the Constitution bench.

While the bench made it clear that Section 139AA will not have any retrospective effect, it said that the Section is neither discriminatory nor does it violate Article 14 (right to equality) or an unreasonable restriction on the right to profession and trade under Article 19.

The bench said the government’s objective to introduce Section 139AA is laudable.

The bench, noting that about 11.35 lakh cases of duplicate PANs/fraudulent PANs have been detected, of which around 10.52 lakh pertain to individual assesses, said that Parliament in its wisdom thought that one PAN to one person can only be ensured by adopting Aadhaar for allotment of PAN to individuals.  

Referring to reports of leakage of data, the bench said it is necessary to highlight that a large section of citizens feel concerned about possible data leak, and that this concern needs to be addressed by the government through proper measures.