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All Posts | Aug 04,2017

[Press Release] High Court permits filing of Income Tax Returns without quoting Aadhaar

Kochi, 4th August 2017: Prasanth Sugathan, Legal Director at SFLC.in filed a Writ petition (W.P.(C) 26033/2017) before the Hon’ble High Court of Kerala , challenging the mandatory requirement as per Section 139AA of the amended Income Tax Act, 1961 to quote Aadhaar number or enrolment ID for filing Income tax returns.

The Hon’ble High Court has admitted the matter and passed an interim order, directing the concerned Income tax Officer to allow the petitioner to file IT Returns manually, without quoting Aadhaar number or Aadhaar enrollment ID.

Earlier this year, the Supreme Court heard the challenge of mandatory linking of Aadhaat to PAN in the cases of Binoy Viswam v. Union of India (W.P.(C) 247/2017), S.G. Vombatkere & Anr. v. Union of India (W.P.(C) 277/2017) and the two-judge bench held that the PAN cards of those people who are not Aadhaar card holders, and who do not comply with the provision of Section 139(2), cannot be “treated as invalid for the time being”.

Prasanth Sugathan submitted before the Hon’ble Court that the partial stay granted by the Hon’ble Supreme Court in the Binoy Viswam case would be futile, if assesses are forced to quote Aadhaar No. while filing the returns.

Mishi Choudhary, President, SFLC.in said that they have been continuously working to raise awareness about the mission creep that is happening with the Aadhaar scheme. The so-called voluntary scheme is being made mandatory for citizens to avail a host of services as well for performing obligations as a citizen.

The interim order can be read here:

About SFLC.in :
SFLC.IN is a donor supported legal services organisation that brings together lawyers, policy analysts, technologists, and students to protect freedom in the digital world. SFLC.IN promotes innovation and open access to knowledge by helping developers make great Free and Open Source Software, protect privacy and civil liberties for citizens in the digital world by educating and providing free legal advice and help policy makers make informed and just decisions with the use and adoption of technology.

For more information please contact:

Mishi Choudhary,
President and Founding Director, SFLC.in
+1 917 325 8594
mishi-at-softwarefreedom-dot-org

Prasanth Sugathan,
Legal Director, SFLC.in
+91 90135 85902 / +91 94472 91565
prasanth-at-sflc-dot-in

All Posts | May 04,2017

Supreme Court hears the Aadhaar-PAN case; updates from Day 6

Arguments in the Supreme Court litigations around linking Aadhaar with PAN, challenging the constitutionality of Section 139AA of the Income Tax Act, were concluded today by Senior advocate Mr. Arvind Datar (also see our updates from day 1day 2day 3day 4, and day 5 of this litigation).

Replying to the State’s arguments, Mr. Datar advanced the following contentions today:

  • Legislative competence: All the previous Supreme court orders including the one passed by a Constitutional bench on 15th October, 2015 pronounce that Aadhaar is voluntary. As long as that order stands, the legislative power of the Parliament under Article 246 remains eclipsed. The question before the court is: if a judgment is given qua executive power, can the Parliament exercise legislative power without removing the basis of the earlier orders? Mr. Datar pointed out that Article 73 of the Constitution says that executive power is coextensive with legislative power and if there is a restraint on executive power, there will be a restraint on the former as well. If the Supreme court has passed an order, it is as binding on the Parliament as it is on any other organ of the State. Therefore, the Parliament had no legislative competence to enact Section 139AA, linking Aadhaar to PAN. The only situations in which Section 139AA can be deemed valid are: 1) Aadhaar is made mandatory under Section 3, and 2) Inserting a non obstante clause under Section 139AA (notwithstanding anything in any other law)
  • Article 14 and Article 19(1)(g): The distinction made under the Aadhaar Act between individuals and companies has no rational nexus with the object sought to be achieved by the Act. Further, proportionality has been a facet of Article 14 since 1959 [Chintaman Rao v. State of Madhya Pradesh; (1950) SCR 759]. Mr. Datar highlighted that proportionality is a part of Article 19(1)(g) as well. A number of small entrepreneurs will be at risk if their PAN is invalidated. This is not a proportional restriction under Article 19(6).

Mr. Datar finished his arguments by appealing to the court to strike down Section 139AA of the Income Tax Act or at least read it down to make the Aadhaar-PAN linkage voluntary.

Senior Counsel Mr. Salman Khurshid also made a brief submission, countering the State’s argument that individuals do not have an absolute right over their body. He explained the meaning of human dignity and the importance of freedom of choice. He said that the measure of a nation is not just its economic growth, but the protection of dignity of every individual.

The State and the petitioners have finished their arguments and the matter is now reserved for judgment.

All Posts | May 03,2017

Supreme Court hears the Aadhaar-PAN case; updates from Day 5

The ongoing challenge in the Supreme Court regarding the linking of Aadhaar for filing of income tax returns, and making it mandatory for PAN, has reached Day 5 when the Union of India continued its arguments. We have been updating details from court proceedings from day 123, and 4 as well.

Day 5 of the hearing began with Dr. Arghya Sengupta laying the following points before the Bench:

  • The doctrine of proportionality is not a facet of Article 14 of the Constitution. It can only be invoked in cases where there is a balancing of rights and restrictions, and Article 14 does not envisage any such balance. Citing the case of K.T. Plantation vs. State of Karnataka, Dr. Sengupta said that the plea of proportionality is subjective by nature and therefore cannot be used to strike down a statute. He further mentioned that proportionality under Article 14 applies only to executive action and not legislative action. A long list of English cases were cited in this regard and to support the argument that in the UK, the doctrine of proportionality is not applied even today. He concluded by saying that the traditional principles of equality followed by Indian judiciary are strong and there is no need to import new principles to this case.

  • There is no absolute right to self determination under Article 21 in India. The state can ask for information from its citizens. Even if we had the right to informational self determination, it cannot be absolute. Further, the conception of privacy prevailing in different parts of the world cannot be incorporated in India. The social and cultural situation has to be assessed before giving meaning to this concept.

  • The safety and security of biometrics as a tool for identification has been studied and analyzed and it has been proven that it is the most fool proof method. He stated that the Aadhaar Act provides privacy protection under Chapter 6 of the Act and under Section 70 of the Information Technology Act, 2000. It was also pointed out that the UIDAI database has never been compromised.

Mr. Zoheb Hossain, Advocate-on-Record, continued the State’s argument. He made the following points:

  • A progressive taxation regime is itself a facet of equality under Article 14. Inclusion of Aadhaar strengthens Article 14 as it eliminates inequality between honest tax payers and individuals avoiding tax and holding multiple bogus PAN cards.

  • Every conduct is not free speech. In the present case, it is speech combined with action and therefore it cannot have protection under Article 19(1)(a). He cited United States vs. David Paul O’Brien to substantiate his argument.

After the state concluded its arguments, Senior Counsel, Mr. Shyam Divan replied from the petitioners’ side. His arguments are as follows:

  • The state has reconciled the voluntary nature of the Aadhaar Act and the mandatory nature of Section 139AA of Income Tax Act to infer that Aadhaar is mandatory. Section 3(1) of the Aadhaar Act uses the word “entitled” and not “obliged”. Section 3(2) says that the enrolling agency shall “inform” enrolling individuals, the manner in which their information shall be used, the nature of recipients with whom the information might be shared, the existence of a right to access information. Section 7 says alternate means of identification is to be provided if Aadhaar is not assigned. Section 8(2)(a) requires consent of an individual before collection of information. Aadhaar enrolment form also states that its free and voluntary. The Aadhaar Authentication Regulation number 6 states that consent of Aadhaar holder is required for authentication. The proviso to Section 57 states that the section is subject to the procedure and obligation under Section 8. The aforementioned sections establish the voluntary nature of Aadhaar as provided in the Act itself. Further, the absence of any sanctions in the Act for non compliance reinforces this fact. Mr. Divan pointed out that the UIDAI website itself claims that Aadhaar is voluntary.

  • Replying to the Attorney General’s argument that Aadhaar act cannot be struck down for lack of legislative competence, Mr. Divan pointed out that there are implied limitations to legislative competence. One of the implied limitations is that the state cannot coerce people to part with their biometric data. We are long past slavery and servitude. He further mentioned that the trajectory of the state’s arguments will create a chilling effect. He emphasized the enormous threat to civil liberties in the present case and prayed to the court to pass interim orders, in case the matter is referred to a larger bench.

Senior Counsel, Mr. Arvind P. Datar continued arguing for the petitioners’ made the following point before the court rose for the day:

  • The Aadhaar Act fails on the aspect of legislative competence. The Supreme Court has passed various orders saying Aadhaar is voluntary and nobody can be forced to enrol under it. The state has repeatedly defied these orders. On the assumption that there’s no Supreme Court order, even then Aadhaar Act and Income Tax Act have to be harmoniously construed, which means that Section 139AA of the IT Act has to be read down.

The hearing in the present matter will be concluded tomorrow with Mr. Datar finishing his final arguments.

All Posts | Mar 28,2017

No Aadhaar, no service- Notifications making Aadhaar mandatory

In Aadhaar news, in the first few months of 2017, the Central Government has issued a spur of notifications making Aadhaar mandatory for various schemes that provide essentials and basic amenities. These notifications are issued under Section 7 of the Aadhaar (Targeted Delivery of Financial and other Subsidies, Benefits, and Services) Act (hereinafter the Aadhaar Act), by several Union Ministries responsible for the roll out and implementation of these schemes. These new notifications have made Aadhaar mandatory for programs like mid day meals, scholarships for disabled students, availing insurance for crop failure, rehabilitation of bonded labour, and welfare scheme aimed at journalists, to name a few.

Apart from these, recently, the Department of Telecommunication issued a notification on 23rd March, 2017 that orders Aadhaar based e-KYC for re-verification of all mobile subscribers, and the amendments made to the Finance Bill, 2017 make Aadhaar mandatory for filing income tax returns and when applying for allotment of permanent account number (PAN).

Per the notifications available on the E-Gazette as of 27th March, 2017, we have collated a list of 52 such notifications that make Aadhaar mandatory despite the Hon’ble Supreme Court’s orders restricting not only the use of Aadhaar, but stating its voluntary nature, and prohibiting denial of service to anyone due to the lack of an Aadhaar card.

The legal foundations of the Aadhaar scheme, and its current legal status are complicated. The Supreme Court in its orders dated 11th August, and 15th October, 2015 had restricted the voluntary usage of Aadhaar to only six government schemes, and maintained that no person would be denied access to any service due to lack of an Aadhaar card. These six government schemes were, LPG, Public Distribution System (PDS), MNREGA, Prime Minister’s Jan Dhan Yojna, Employees’ Providend Fund, and National Social Assistance Programme. However, on the legislative side of things, the Aadhaar Act was passed in March 2016 as a money bill in the Parliament, but the Supreme Court’s orders of 2015 putting limitations on the operation of this scheme until the pending matters are decided with finality are still in effect.

The notifications by various Union Ministries issued since January, 2017 are under Section 7 of the Aadhaar Act. Section 7 gives Central and State governments power to make Aadhaar or enrollment into the scheme as a condition for availing benefits of schemes that incur expenditure from the Consolidated Fund of India. The notifications issued by the various Ministries make Aadhaar mandatory for ‘beneficiaries’ of these schemes, which may vary from individuals receiving the entitlements under these welfare programs, or even employees’, contractual staff, Anganwadi workers getting an honorarium or remuneration while working in departments providing these services.

Majority of these notifications have a designated deadline before which “Any individual desirous of availing benefit under the [said] Scheme, who does not possess the Aadhaar number or has not yet enrolled for Aadhaar shall have to apply for Aadhaar enrolment by [a set date], provided he or she is entitled to obtain Aadhaar as per the provisions of section 3 of the said Act and such individuals may visit any Aadhaar Enrolment Centre (list available at UIDAI website (www.uidai.gov.in) for Aadhaar enrolment.” This date is an indication of a time period until which claims under these schemes can be made sans Aadhaar or its enrolment.

A consolidated list of these notifications updated till 27th March, 2017 can be found below.

[SFLC.in's resources on Aadhaar can be accessed here]

Image Credits: Projet de biométrie. Credit: Benoit Crouzet/Flickr CC BY 2.0