New Delhi: The Supreme Court on Friday upheld the newly-inserted provision in the Income Tax Act mandating linking of the Aadhaar number with the Permanent Account Number (PAN), but partially blocked its operation.
A bench of Justice A.K. Sikri and Justice Ashok Bhushan in their judgment held that those who already possess the Aadhaar number will have to link it with PAN, but it cannot be insisted upon in case of people not possessing it.
The bench said that those who have already applied for Aadhaar number but are yet to receive it would suffer no adverse consequences and their PAN cards would not be invalidated as this would have "serious consequences".
Section 139AA of the Income Tax Act, incorporated by way of the Finance Act 2017-2018, provides for the invalidation of PAN if it is not linked to Aadhaar number.
The court said that operation of the provision that provides for the invalidation of PAN if it is not linked to Aadhaar number would be prospective and not retrospective, and thus read down its sub-section 2 which says that not linking Aadhaar with PAN would invalidate the latter as if it was never applied for.
Speaking for the bench, Justice Sikri noted that such an invalidation of PAN would have a "rippling effect" of "undoing all the acts done by a person on the basis of such a PAN" in the past.
This may result in "such a citizen incurring other penal consequences under the (Income Tax) Act for earlier period on the ground that there was no PAN registration by a particular assessee".
"The rights which are already accrued to a person in law cannot be taken away. Therefore, this provision needs to be read down by making it clear that it would operate prospectively," he said.
Examining Section 139AA's validity in context of the Constitution's Article 14 and Article 19(1)(g), the court held it was not "discriminatory" and did not "offend equality" under Article 14. It however noted that its validity was "subject to passing the muster of Article 21 of the Constitution, which is the issue before the Constitution Bench..."
To the contention that the government went ahead with this provision despite the court's orders that Aadhaar was voluntary and could not be insisted upon except for getting benefits under social welfare schemes, the bench said: "We hold that the Parliament was fully competent to enact Section 139AA of the Act and its authority to make this law was not diluted by the orders of this Court."
The court also rejected the plea by the petitioners -- senior Communist Party of India leader Binoy Visman, Maj.Gen. S.G. Vombatkere (retd.) and Safai Karamchari Andolan convenor Bezwada Wilson that it should be voluntary and not mandatory.
Addressing repeated concerns of the petitioners about leakage of personal information of the citizens, the court said that this "concern ... needs to be addressed by the Government" by taking "proper measures" and instilling confidence among the public at large that there is "no chance of unauthorised leakage of data ..."
"We emphasise that measures in this behalf are absolutely essential and it would be in the fitness of things that proper scheme in this behalf is devised at the earliest," it added.
Referring to the right of human dignity as a facet of Article 21 raised by the petitioners while steering clear from raising the issue of privacy, the court said that these were overlapping and did not address them as the question whether privacy was a right was referred to the Constitution Bench on August 11, 2015, following conflicting judgments by the apex court on the matter.