The Supreme Court on Wednesday said it was “shameful” that people do not want to pay taxes and clarified that it cannot stop Parliament from enacting a law, as the central government defended its move to link Aadhaar with PAN cards and Income Tax returns in order to check tax evasion.
“We citizens don’t want to pay taxes. Shame on us. It is shameful. We are a kind of society where we want to evade taxes. We are not a tax-compliant society,” said a bench of Justices A K Sikri and Ashok Bhushan.
The court is adjudicating two PILs that have challenged the constitutionality of Section 139AA, inserted in the Income Tax Act under the Finance Act, 2017. The new provisions make Aadhaar mandatory for procuring a Permanent Account Number (PAN) card and for filing I-T returns.
Arguing for CPI leader Binoy Viswam, who is one of the petitioners, senior lawyer Arvind Datar said the Aadhaar Act does not say that it is meant to check black money or weed out fake and fraudulent PANs — as stressed upon by Attorney General Mukul Rohatgi in his defence of the new law.
But the bench observed that the purpose of the Aadhaar Act was different, as it confined itself to targeted delivery of benefits and services to marginalised sections of the society. Therefore, this statute was not supposed to mention black money or fake PAN cards. “Why would they mention black money in Aadhaar Act, which seeks to give benefits to people who are hand-to-mouth,” asked the bench.
The senior lawyer then sought to point out that making Aadhaar mandatory was in contravention of the apex court’s orders in a clutch of other matters, wherein a Constitution Bench had in 2015 said that Aadhaar cannot be made mandatory for according social welfare benefits.
At this, Rohatgi intervened and said the orders were passed at a time when the government had not enacted and notified the Aadhaar Act, but introduction of the law had changed its legal status.
“We have not passed any judgment in those cases. There are only interim orders. The interim arrangement was made when there was no law. Now the Parliament has enacted a law. Can we preclude the Parliament from making a law? Can the interim orders passed by us on certain statements made by them (government) bind them forever? We can definitely examine the validity of the new law on touchstones of the Constitution but there cannot be any injunction against the Parliament from enacting a law,” said the bench.
As the lawyers debated the utility of the new law for checking tax evasion, the bench pointed out that people in India try to evade taxes. “When tax evasion is there, the government will bring in new laws to stop it and other leakages. What difference would it make if PAN is replaced by Aadhaar,” it asked Datar.
Datar said the new law forces even a bona fide taxpayer to get an Aadhaar card, although he may want to submit his returns by showing other proof. He also pointed out that the Finance Act incorporated a provision whereby the PAN cards of those who do not get Aadhaar by July 1, 2017, would be rendered invalid, and it would be retrospectively presumed that they never applied for PAN.
However, Rohatgi clarified that there was no retrospective operation of this provision, and such PAN cards would be treated as invalid only with effect from July 1, leaving all previous I-T returns etc undisturbed.
The court also noted the AG’s submission that 99 per cent of India’s population was enrolled under UID and have Aadhaar cards. “It seems 99 per cent people don’t have issues with Aadhaar. We will now examine the rest,” it said.
The second petition was filed by retired Major General S G Vombatkere and social activist Bezwada Wilson, who were represented by senior lawyer Shyam Divan. Although Divan said his petition was not raising issues of alleged breach of privacy by collection of biometric details, he began his submission by calling Aadhaar an “electronic leash” capable of “complete real-time surveillance” and “profiling” of individuals. Divan will continue his arguments on Thursday.