The Supreme Court on Wednesday witnessed spirited arguments against making Aadhaar, the 12-digit unique identification number given to residents, mandatory for filing income tax returns and obtaining a Permanent Account Number, with senior lawyer Arvind Datar claiming that the amendment to the Income Tax Act facilitating such a move was violative of Article 14 of the Constitution.
Article 14 guarantees all citizens equality before law and states that the “State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India.” It also places “prohibition of discrimination on grounds of religion, race, caste, sex or place of birth.”
Datar appeared in court on behalf of Communist Party of India Rajya Sabha MP, Binoy Viswam, whose petition challenged the constitutional validity of the Section 139 AA of the Income Tax Act, a provision included through the Finance Bill in the Budget session of the Parliament last month. Datar argued that the very nature of the amendment made Aadhaar mandatory only for individuals and not other category of income tax assessees such as partnership firms and companies.
The lawyer argued that by doing so, it discriminated against individuals, who under the Income Tax Act could be deemed a separate class of persons.
He also criticised the Centre for going back on its undertaking before the Supreme Court that Aadhaar would not be made mandatory to access any benefit or service.
When the proceedings began on Wednesday morning, the bench comprising of Justices AK Sikri and Ashok Bhushan initially refused to entertain pleadings for a stay on Section 139 AA. “There is a pending constitutional challenge to Aadhaar on the basis of privacy. There cannot be a stay,” the bench said.
The lawyers appearing for those challenging the change in income tax law then said that they would not go into the aspect of privacy, which was being dealt with by a Constitution bench scrutinising the validity of the Aadhaar Act itself. Rather, for the sake of this particular case, it would be assumed that the Aadhaar Act was valid and the court could decide whether the move to make the unique identification number mandatory for income tax returns was arbitrary and imposed unreasonable restrictions on citizens.
Violating Article 14
Datar said Section 139 AA, which made Aadhaar mandatory for filing income tax returns and for applying for PAN, was not part of the original Finance Bill. It was included later and no reason was given on why it was being done.
The lawyer said the Income Tax Act has different categories of assessees like individuals, Hindu undivided family, partnership firms and companies. Section 139 AA states that those eligible to obtain an Aadhaar number should quote it while filing income tax returns. Since under law all categories except an individual are artificial persons, they are not required to obtain Aadhaar.
“This discriminates individuals as a class of people,” Datar argued.
The lawyer also listed 18 different areas where quoting PAN was mandatory, including banking transactions of over Rs 50,000. If PAN becomes invalid due to a person not obtaining Aadhaar, it would virtually mean “civil death”.
Secondly, Datar said the language of 139 AA was problematic as it suggested that the invalidation of PAN could be enforced retrospectively. The new section said a failure to link Aadhaar to PAN by July 1, the PAN, after that date, will be deemed invalid as if the person never applied for it. This, the lawyer argued, would lead to reopening of decades-old assessments and proceedings against individuals who have duly paid tax. Under the Income Tax Act, lack of PAN will attract double the tax.
However, Attorney General Mukul Rohatgi intervened and strongly objected to such an interpretation and said Section 139 AA will not apply retrospectively but prospectively from July 1. The bench, in response to this exchange, indicated that they too preferred the prospective reading of the section.
Violating promises
Datar also argued that by making Aadhaar mandatory for income tax returns, the Centre had nullified a previous directive of the Supreme Court, which made it clear that Aadhaar cannot be made compulsory for any benefit or service. While this order of the court was an interim one, he said it carried the same force as a judgement as it was in the form of a mandamus (command).
The route taken by Centre to nullify the Supreme Court’s order was invalid. “If they want to replace PAN with Aadhaar, they should amend the parent Act. While Aadhaar in the Aadhaar Act is voluntary, it has been made compulsory under the Income Tax Act through Section 139 AA,” he added. This was in response to the bench’s poser how the court could intervene and question Parliament if it wants to replace PAN with Aadhaar as it has done with Section 139 AA.
Further, the lawyer said nowhere in the Aadhaar Act has it been stated that curbing black money and duplication of PAN was an objective.
The Centre, in its counter affidavit, claimed that linking Aadhaar with PAN will help contain the flow of black money by making duplication of PAN impossible. Rohatgi told the court that a big fraud was being done to the nation through 10 lakh fake PANs. “Are you propagating public interest or stating that the fraud should go on?” he asked.
To this, Datar said Aadhaar was not immune to duplication and said for every 100 citizens, there were now 104 Aadhaar numbers. In Delhi, it was 132.
Senior counsel Shyam Divan, appearing for human rights activist Bezwada Wilson, said an individual had complete dominion over his or her body. Under the Indian Constitution, he said state cannot claim dominion over the body. Otherwise, the state becomes totalitarian.
He said by insisting on Aadhaar, which involves biometric verification through fingerprints and iris scans, the state was violating this important principle. He said Aadhaar applies to even children, who are below the age of free consent. Further, he said the intimate information of an individual goes to private entities who do registration for the government. The state has blacklisted 34,000 such private players for various violations, indicating how dangerous the system was, he pointed out.
The hearing will continue on Thursday.
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