Vide the Finance Bill for 2017-18, the union government amended the Income Tax Act [1961] by inserting Section 139AA to make seeding of PAN number with Aadhaar mandatory. Henceforth, for financial year 2016-17 [assessment year 2017-18] onwards, it won’t be possible to file IT return using PAN not authenticated with Aadhaar. Further, no fresh PAN will be issued unless the applicant submits his/her Aadhaar number.
The validity of the above amendment has been challenged in the Supreme Court [SC] who has questioned government’s decision to make Aadhaar card mandatory in view of its earlier order to make it ‘optional’. At the outset, it is important to ask as to why the government was forced to take such a decision.
It had come to the notice of authorities that a number of fake PAN cards had surfaced [there were instances of the same person possessing multiple PANs] and were being used to divert funds to shell companies. The modus operandi was being used to convert black money in to white. Since, Aadhaar has biometric details of the person, seeding of Aadhaar on PAN will make impersonation or faking impossible thereby nipping the problem in the bud.
Making use of Aadhaar compulsory can help in reining in malpractices in a host of other areas. For instance, it is common knowledge that a major slice of black money is generated in real estate sector as presently, there is no check on holding property in ‘benami’ [anonymous] names. The requirement to declare Aadhaar number in all property transactions will help curb such practices.
Likewise, a look at passport number in juxtaposition with PAN and Aadhaar will help IT authorities in chasing trail of cross-border transactions and help to bring back black money stashed abroad. Currently, millions of driving licenses in use are fake. This is a major reason for tens of thousands of deaths in road accidents every year. With requirement of Aadhaar made obligatory for issue of driving license, this malady will be completely eliminated.
At another level, government was also facing problem of leakages – running in to tens of thousands of crores – in implementation of welfare schemes and disbursement of subsidies. To address this, in March 2016, it got the Aadhaar [Targeted Delivery of Financial and Other Subsidies, Benefits and Services] Bill, 2016 passed. The Act made it mandatory for a person to enroll him/her for Aadhaar in order to be eligible for receiving a subsidy or government service.
Despite its manifold benefits and steps taken by government to leverage it, the constitutional validity of Aadhaar itself was challenged merely on the ground that Unique Identification Authority of India [UIDAI] which issues Aadhaar card [it has already issued one billion cards] was set up vide an executive order. Even worse, the apex court has gone out of the way to accommodate the petitioners.
In its interim order [August 11, 2015] on that petition, a three member bench had permitted use of Aadhaar only for delivering subsidy on food under public distribution system [PDS], LPG [liquefied petroleum gas], MGNREGA [Mahatma Gandhi National Rural Employment Guarantee Act] and PM Jan Dhan Yojana on a ‘voluntary’ basis. For all other welfare schemes such as pension, scholarship, provident fund etc, it disallowed Aadhaar’s use even on voluntary basis.
The reason given by the apex court for refraining from mandating blanket use for all purposes was an apprehension that it would infringe on the citizen’s right to privacy. The matter was referred to a constitutional bench for an appropriate decision.
Meanwhile, in an order delivered on March 28, 2017, another three-member bench headed by Chief Justice JS Khehar, reiterated the position stated in the August 11, 2015 order that “disbursements of assorted government subsidies and doles cannot be strictly Aadhaar-linked”, but added that ‘there was no bar on linking of non-welfare schemes to Aadhaar’.
From the second part of the order, it is abundantly clear that SC did not prohibit government from making Aadhaar mandatory for non-welfare purposes. Indeed, the levy of income tax and the mechanism of its collection [read filing of return, scrutiny and assessment by the department] is a non-welfare measure. It is a statutory requirement for collection of taxes so that all development and welfare related activities can be adequately funded.
In view of above, when the government makes seeding of Aadhaar on PAN card mandatory for filing of IT return and even gets an amendment passed by the parliament, it is not committing any illegality. There is no violation of SC order either. Therefore, now for SC to question the decision of government is anomalous.
If, apex court feels that privacy is an over-arching consideration and a decision on this is a prerequisite before use of Aadhaar is permitted then [untenable though], why should it allow its use – optional or otherwise – even for selective purposes. Why should its constitution bench not come out with a decision within a set deadline?
Even so, we need to ponder whether measures aimed at curbing leakages in implementation of welfare schemes, tackling the menace of black money and getting all taxes legitimately due from tax payers can be held hostage to privacy of an individual. Considering the present perilous state of majority of the poor, mammoth resources needed to put India on a high growth trajectory and fund welfare activities, without doubt, former must get top priority. These considerations are no less important than protecting national security in pursuant to which SC had already allowed mandatory use of Aadhaar for procuring SIM cards.
The apex court should therefore, get over its obsession with privacy issue and remove its veto over use of Aadhaar in all welfare schemes, delivery of public services and other areas such as PAN/filing of returns, registering property deals, issue of driving licenses, passport etc. However, it can take an affidavit from the government that it shall maintain strict confidentiality of the information.