Aadhaar enabled payment systems. (Source: The Quint)

Those Without Aadhaar Can Still File Income Tax Returns: Supreme Court

The Supreme Court ruled on Friday that Aadhaar will not be mandatory to file income tax returns for those who do not have the unique ID. However, taxpayers with a permanent account number and Aadhaar will have to link the two.

The apex court did not strike down Section 139AA of the Income Tax Act, 1961 that mandates Aadhaar-PAN linkage, but said that as an interim measure the biometric ID will not be mandatory to file returns.

The partial stay will remain in place until the issue of “right to privacy” is decided by a larger panel of judges, a two-judge Supreme Court bench headed by Justice AK Sikri said. The bench hoped the government will address security issues related to Aadhaar data soon.

Originally pitched as a tool to plug subsidy leakages, the Narendra Modi government decided to link Aadhaar with PAN to curb tax evasion, something its critics call invasion of privacy. The government has said multiple times that more than 99 percent of the adults in the country have an Aadhaar ID.

Explaining the Supreme Court order, Salman Khurshid, counsel for one of the petitioners, said, “Partial relief for the citizen is, if you don't have an Aadhaar card, you are not going to get every transaction of yours based on a PAN card invalidated. If you want to get an Aadhaar card, you are free to do so. If you don't get an Aadhaar card, your transactions and returns on the basis of your PAN card will still remain valid.”

Finally this will be decided by the Constitutional bench. They’ve only decided this issue temporarily, saying the rest of the issues, the larger issue of citizens and so on will be decided by the Constitutional bench.
Salman Khurshid, Petitioner’s Counsel

Attorney General of India Mukul Rohatgi, who was representing the government in the case, said the court’s judgment was a clear vindication of the government’s stand that Aadhaar is a beneficiary scheme. There was hardly any stay on making linkage of Aadhaar mandatory with PAN, as the court has almost upheld all the changes made by Parliament to the Finance Act, he said.

The Court said as a larger challenge is pending... of that of so called right to privacy, the current mandate that it (Aadhaar) should be made mandatory even for those who don’t have Aadhaar that part should not be enforced... It (the case) might be revived for this right to privacy, all the other arguments of the petitioners have been finished. 
Mukul Rohatgi, Attorney General

The apex court’s verdict on Friday came on a batch of petitions challenging Section 139AA of the Income Tax Act, which was added through the Finance Act 2017 to make Aadhaar-PAN linkage mandatory for tax purposes.

The petitioners had objected to the provision citing that Aadhaar, when it was introduced, was voluntary. They also emphasised citizens’ right to bodily integrity.

What The Petitioners Said

The petitioners, represented by Senior Advocates Shyam Divan and Arvind Datar, argued that Section 139AA was against the court order that had said Aadhaar is voluntary.

Divan said there is complete collision between the Aadhaar Act and Section 139AA of the Income Tax Act, 1961 in as much as it is a “colourable exercise of legislative power” which converts a right into a duty.

During the hearing, emphasising that the judgment will have far-reaching consequences, Datar had said if Section 139AA is upheld, what stops the government from making Aadhaar mandatory for the Goods and Services Tax (GST).

Now their purpose is to promote Aadhaar so they say it will solve everything from black money to terror funding. They talk about economy of the country and also about international relations. Is this some kind of a herbal medicine?
Arvind Datar, Senior Advocate (During The Course Of The Hearing)

Divan had argued “as far as my biometrics are concerned, the State cannot take it without consent except for limited purposes. The object of the statute is discriminatory because it creates an artificial class of assessees who are otherwise willing to pay taxes but refused to give their biometrics as conscientious objectors”.

What The Government Said

Attorney General Mukul Rohatgi, representing the government, had called the arguments against Aadhaar “much ado about nothing”.

Collecting biometrics does not mean “Uncle Sam is snooping on you”, AG had said, arguing that bodily integrity is not an absolute right and can be curtailed by procedures laid down by the law.