It held that Section 139AA (1) was not violative of the right to trade and profession under Article 19(1)(g) of the Constitution insofar as it mandates giving of Aadhaar enrollment number for applying for PAN cards in the income tax returns or notified Aadhaar enrollment number to the designated authorities.
Neither did the court find Section 139AA discriminatory. It said the Parliament was fully competent to enact Section 139AA and its authority to make this law was not diluted by the orders of the Supreme Court that Aadhaar was voluntary. “We do not find any conflict between the provisions of Aadhaar Act and Section 139AA of the Income Tax Act inasmuch as when interpreted harmoniously, they operate in distinct fields,” the court held. The court however upheld Section 139AA (2), which makes it mandatory for citizens who hold a PAN as on July 1, 2017, and are eligible to obtain Aadhaar number to intimate his Aadhaar number to the authorities for filing income tax returns. Those who have enrolled for Aadhaar are also free to do the same.
However, the court issued a “partial stay” on the proviso to Section 139AA (2) , which mandates that those who do not link Aadhaar with PAN by July 1 would face the consequences of invalidation of their PAN ab inito - that is, the effect of non-compliance would be the automatic invalidation of their PAN as it had never existed.
“A person who is holder of PAN and if his PAN is invalidated, he is bound to suffer immensely in his day-to-day dealings, which situation should be avoided till the Constitution Bench authoritatively determines the argument of Article 21 of the Constitution,” Justice Sikri, who authored the judgment, observed. The court further suggested to the Parliament to consider whether there is a need to “tone down the effect” of the proviso to Section 139AA (2) by limiting the consequences.
The court cautioned the government to take all proper measures to prevent assuage public apprehensions about data leakage by taking proper measures so that confidence is instilled among the public at large. “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,” the court held.
Interpretation of Supreme Court Judgement
The Interpretation (strictly as it stands, maybe the court will clarify, maybe it stands as is) is that if you have an Aadhaar number than you need to seed it with PAN, no doubts there. If you do not have an Aadhaar number, in that case even if you do not seed your Aadhaar number, the PAN card will not be cancelled.
However, and this is where it gets tricky due to the drafting of the judgement (or clever drafting if this was the intent), if you have to file your returns after July 1, you cannot do that without quoting your Aadhaar number. There is no relief from consequences of not filing IT returns. So you get one year to get yourself an Aadhaar number if you file your returns before June 30 (provided you don’t have to file again for whatever reason until next year). One can ask then what’s the relief? and one won’t be wrong. Such are the dangers of drafting (extremely cleverly drafted if this was the intent). That’s it, all there is to the judgement.
Above is the interpretation, what follows is some background and opinion in this case
SC was asked to opine on many things under the petition relating to various articles of the constitution, Now the constitutional challenge to Aadhaar was made in the SC at the time when Aadhaar was an executive scheme. SC three-judge bench referred that case to a larger bench at that time and the larger bench is not yet constituted. Considering this, at the beginning of the PAN/Aadhaar arguments, the Court wanted to keep this case as part of the pending challenge before the still to be constituted larger bench. I believe it was to avoid this fate that the Petitioners agreed to make their arguments without relying on the right to privacy. It was a well-considered gamble, which I believe
partly paid off and the core reason for how strange the verdict looks.
If all this sounds strange, it is. For me, working in the thick of our country’s legal system, it is easy to understand why the court did what it did, but I can imagine how this sounds to those who don’t. So an attempt to give you some solace - Firstly this is what happens when you keep some of the most crucial arguments (relating to the right to privacy) out of the purview because the constitutional bench has to decide on that. What the SC decided was on the limited points raised and addressed.
On the larger ‘Aadhaar being made mandatory’ point, the petitioners did, in fact, argued that the law should not have been passed in light of the Supreme Court orders specifying that Aadhaar could not be made mandatory. To this, the Court has said that the earlier orders were towards Aadhaar as an executive scheme, and the legislature can pass a law making Aadhaar compulsory.