Supreme Court rules that it would be mandatory for all Aadhaar holders to link the unique identity number with the PAN for filing income tax returns
New Delhi: The Supreme Court on Friday upheld the government’s decision to link Aadhaar with the permanent account number (PAN) for the filing of income tax returns, but ruled that non-compliance with the law will carry no retrospective criminal consequences.
“We reject the argument that the law is arbitrary or that the Parliament lacks competence to bring in such a legislation," the apex court said.
Under the Aadhaar (Targeted Delivery of Financial Subsidies, Benefits and Services) Act, 2016, the unique identity number is mandatory only to receive social welfare benefits. But according to the provisions of the Finance Act 2017, the Aadhaar number or Aadhaar enrolment number will be mandatory to file income tax returns and to apply for a new PAN.
An existing PAN can be declared void if the taxpayer does not link it with Aadhaar by 31 July, the Finance Act said.
The apex court’s ruling makes it mandatory for every Aadhaar holder to link the unique identity number with their PAN for filing income tax returns.
The court, however, said that an individual’s PAN cannot be invalidated retrospectively for failing to link it with Aadhaar, doing away with the so-called criminal consequences. This means that taxpayers’ previous returns cannot be called into question for failure to link the two.
Aadhaar is also mandatory to obtain or retain PAN. However, permanent account numbers of those without Aadhaar will not be invalidated for the time being.
Justices A.K. Sikri and Ashok Bhushan clarified that the present ruling is subject to the outcome in cases challenging the constitutional validity of the Aadhaar scheme.
In August 2015, a three-judge bench referred the question of whether an Indian citizen enjoys the fundamental right to privacy to a larger Constitution bench, which is yet to be constituted.
The apex court specified that it did not consider arguments that Aadhaar could potentially violate a citizen’s right to privacy because the larger bench will decide on that issue.
“This is a vindication of the government’s stand. The only concession that the court has made (allowing those without an Aadhaar to file taxes) is temporary. In any case, there will hardly be any PAN holders without Aadhaar," the government’s top law officer, attorney general Mukul Rohatgi, said in a phone interview.
Three petitions were filed before the top court by Binoy Vishwam, a senior Communist Party of India leader, Bezwada Wilson, a Dalit rights activist, and S.G. Vombatkere, a retired army officer, against the government’s decision, announced in this year’s Union budget, on linking the Aadhaar number to PAN.
Senior advocates Arvind Datar and Shyam Divan had argued that the decision to link Aadhaar with PAN was legally unsustainable as the validity of Aadhaar was yet to be decided by the court.
The court, in its ruling, also referred to instances of leaks of Aadhaar holders’ data and emphasized that the government must take steps to curb such leaks.
“It is important to take proper measures so that confidence is instilled among the public at large that there is no chance of unauthorised leakage of data. Whether it is done by tightening the operations of the contractors who are given the job of enrolment, they being private persons, or by prescribing severe penalties to those who are found guilty of leaking the details, is the outlook of the government," the court said.
“It seems that the court has erred on the side of a potential violation of privacy, given that this ruling is ultimately subject to the Constitution bench deciding whether privacy is a fundamental right or not," said Chinmayi Arun, director at the Centre for Communication Governance at National Law University, Delhi.
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