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TMI Blog2017 (6) TMI 478X X X X Extracts X X X X X X X X Extracts X X X X ..... enge is laid to the constitutional validity of Section 139AA of the Income Tax Act, 1961 (hereinafter referred to as the 'Act'), which provision has been inserted by the amendment to the said Act vide Finance Act, 2017. Section 139AA of the Act reads as under: "Quoting of Aadhaar number. - (1) Every person who is eligible to obtain Aadhaar number shall, on or after the 1st day of July, 2017, quote Aadhaar number- (i) in the application form for allotment of permanent account number; (ii) in the return of income: Provided that where the person does not possess the Aadhaar Number, the Enrolment ID of Aadhaar application form issued to him at the time of enrolment shall be quoted in the application for permanent account number or, as the case may be, in the return of income furnished by him. (2) Every person who has been allotted permanent account number as on the 1st day of July, 2017, and who is eligible to obtain Aadhaar number, shall intimate his Aadhaar number to such authority in such form and manner as may be prescribed, on or before a date to be notified by the Central Government in the Official Gazette: Provided that in case of failure to intimate the Aadhaar numb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sub-section (3), however, gives discretion to the Central Government to exempt such person or class or classes of persons or any State or part of any State from the requirement of quoting Aadhaar number in the application form for PAN or in the return of income. The challenge is to this compulsive nature of provision inasmuch as with the introduction of the aforesaid provision, no discretion is left with the income-tax assessees insofar as enrolment under the Aadhaar (Targeting Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (hereinafter referred to as the 'Aadhaar Act') is concerned. According to the petitioners, though Aadhaar Act prescribes that enrolment under the said Act is voluntary and gives choice to a person to enrol or not to enrol himself and obtain Aadhaar card, this compulsive element thrusted in Section 139AA of the Act makes the said provision unconstitutional. The basis on which the petitioners so contend would be taken note of at the appropriate stage. Purpose of these introductory remarks was to highlight the issue involved in these writ petitions at the threshold. 4) Before we take note of the arguments advanced by the petitioners a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udge of the Karnataka High Court before this Court, challenging the UID scheme stating therein that the same does not have any statutory basis and it violated the 'Right to Privacy', which is a facet of Article 21 of the Constitution. This Court decided to consider the plea raised in the said writ petition and issued notice. Vide order dated September 23, 2013, the Court also passed the following directions: "In the meanwhile, no person should suffer for not getting the Aadhaar card in spite of the fact that some authority had issued a circular making it mandatory and when any person applies to get the Aadhaar Card voluntarily, it may be checked whether that person is entitled for it under the law and it should not be given to any illegal immigrant." In the meanwhile, various writ petitions were filed by public spirited citizens and organisations challenging the validity of the Aadhaar scheme and this Court has tagged all those petitions along with Writ Petition (Civil) No. 494 of 2012. 8) In the meantime, in some proceedings before the Bombay High Court, the said High Court passed orders requiring UIDAI to provide biometric information to CBI for investigation purposes with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such a Right exists, what is the source and what are the contours of such a Right as there is no express provision in the Constitution adumbrating the Right to Privacy. 10) Though, this suggestion of the respondents were opposed by the counsel for the petitioners, the said Bench still deemed it proper to refer the matter to the Larger Bench and the reasons for taking this course of action are mentioned in paras 12 and 13 of the order dated August 11, 2015 which reads as under: "12. We are of the opinion that the cases on hand raise far reaching questions of importance involving interpretation of the Constitution. What is at stake is the amplitude of the fundamental rights including that precious and inalienable right under Article 21. If the observations made in M.P. Sharma (supra) and Kharak Singh (supra) are to be read literally and accepted as the law of this country, the fundamental rights guaranteed under the Constitution of India and more particularly right to liberty under Article 21 would be denuded of vigour and vitality. At the same time, we are also of the opinion that the institutional integrity and judicial discipline require that pronouncement made by larger Benc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng further in the matter of obtaining biometrics etc. for an Aadhaar card. Shri Shyam Divan submitted that the biometric information of an individual can be circulated to other authorities or corporate bodies which, in turn can be used by them for commercial exploitation and, therefore, must be stopped. The learned Attorney General pointed out, on the other hand, that this Court has at no point of time, even while making the interim order dated 23.9.2013 granted an injunction restraining the Unique Identification Authority of India from going ahead and obtaining biometric or other information from a citizen for the purpose of a Unique Identification Number, better known as "Aadhaar card". It was further submitted that the respondents have gone ahead with the project and have issued Aadhaar cards to about 90% of the population. Also that a large amount of money has been spent by the Union Government on this project for issuing Aadhaar cards and that in the circumstances, none of the well-known consideration for grant of injunction are in favour of the petitioners. The learned Attorney General stated that the respondents do not share any personal information of an Aadhaar card ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestigation. Ordered accordingly." 12) In nutshell, the direction is that obtaining an Aadhaar Card is not mandatory and the benefits due to a citizen under any scheme are not to be denied in the absence of Aadhaar Card. Further, unique identification number or the Aadhaar Card was to be used only for the PDS Scheme and, in particular, for the purpose of distribution of food grains etc. and cooking fuels such as Kerosene and LPG Distribution Scheme, with clear mandate that it will not be used by the respondents for any other purpose. Even the information about the individual collected while issuing an Aadhaar Card was not to be used for any other purpose, except when it is directed by the Court for the purpose of criminal investigation. Thus, making of Aadhaar Card was not to be made mandatory and it was to be used only for PDS Scheme and LPG Distribution Scheme. Thereafter, certain applications for modification of the aforesaid order dated August 11, 2015 was filed before this Court by the Union of India and a five Judges Bench of this Court was pleased to pass the following order: "3. After hearing the learned Attorney General for India and other learned senior counsels, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, subsidies, services and other purposes. Later on, it was felt that the process of enrolment, authentication, security, confidentiality and use of Aadhaar related information be made statutory so as to facilitate the use of Aadhaar number for delivery of various benefits, subsidies and services, the expenditures of which were incurred from or receipts therefrom formed part of the Consolidated Fund of India. The Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Bill, 2016 inter alia, provides for establishment of Unique Identification Authority of India, issuance of Aadhaar number to individuals, maintenance and updating of information in the Central Identities Data Repository, issues pertaining to security, privacy and confidentiality of information as well as offences and penalties for contravention of relevant statutory provisions." 16) In the Statement of Objects and Reasons, it is inter alia mentioned that though number of social benefits schemes have been floated by the Government, the failure to establish identity of an individual has proved to be a major hindrance for successful implementation of those programmes as it was becoming di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... biometric information of an individual is submitted to the Central Identities Data Repository for its verification and such Repository verifies the correctness, or the lack thereof, on the basis of information available with it; 2(d) "authentication record" means the record of the time of authentication and identity of the requesting entity and the response provided by the Authority thereto; 2(e) "Authority" means the Unique Identification Authority of India established under sub-section (1) of section 11; xxx xxx xxx 2(g) "biometric information" means photograph, finger print, Iris scan, or such other biological attributes of an individual as may be specified by regulations; 2(h) "Central Identities Data Repository" means a centralised database in one or more locations containing all Aadhaar numbers issued to Aadhaar number holders along with the corresponding demographic information and biometric information of such individuals and other information related thereto; xxx xxx xxx 2(k) "demographic information" includes information relating to the name, date of birth, address and other relevant information of an individual, as may be specified by regulations for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber or in the case of an individual to whom no Aadhaar number has been assigned, such individual makes an application for enrolment: Provided that if an Aadhaar number is not assigned to an individual, the individual shall be offered alternate and viable means of identification for delivery of the subsidy, benefit or service. xxx xxx xxx 28. Security and confidentiality of information - (1) The Authority shall ensure the security of identity information and authentication records of individuals. (2) Subject to the provisions of this Act, the Authority shall ensure confidentiality of identity information and authentication records of individuals. (3) The Authority shall take all necessary measures to ensure that the information in the possession or control of the Authority, including information stored in the Central Identities Data Repository, is secured and protected against access, use or disclosure not permitted under this Act or regulations made thereunder, and against accidental or intentional destruction, loss or damage. (4) Without prejudice to sub-sections (1) and (2), the Authority shall- (a) adopt and implement appropriate technical and organisational securit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n electronic form, in accordance with this Act and regulations made thereunder, shall be deemed to be "electronic record" and "sensitive personal data or information", and the provisions contained in the Information Technology Act, 2000 (21 of 2000) and the rules made thereunder shall apply to such information, in addition to, and to the extent not in derogation of the provisions of this Act. Explanation.-- For the purposes of this section, the expressions- (a) "electronic form" shall have the same meaning as assigned to it in clause (r) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000); (b) "electronic record" shall have the same meaning as assigned to it in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000); "sensitive personal data or information" shall have the same meaning as assigned to it in clause (iii) of the Explanation to section 43A of the Information Technology Act, 2000 (21 of 2000)." That apart, Chapter VII which comprises Sections 34 to 47, mentions various offences and prescribes penalties therefor. 18) Even the Constitutional validity of the aforesaid Act is challenged in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew our attention to the proviso to Section 7 of the Aadhaar Act as per which a person is not to be deprived of subsidies as per the various schemes of the Government as the said proviso clearly mentions that if an Aadhaar Number is not assigned to an individual, he shall be offered alternate and viable means of identification for delivery of subsidy, benefit or service. According to him, there was a total reversal of the aforesaid approach for assessees under the Income Tax Act and those who wanted to apply for issuance of PAN Card inasmuch as not only it was made compulsory for them to get Aadhaar enrollment number, but serious consequences were also provided for not adhering to this requirement. In their cases, PAN issued to these assessees had to become invalid, that too from the retrospective effect i.e. from the date when it is issued. Having regard to the aforesaid, the legal submission of Mr. Datar was that Section 139AA was unconstitutional and without legislative competence inasmuch as this provision was enacted contrary to the binding nature of the judgments/directions of this Court which was categorical that Aadhaar had to remain voluntary. Questioning the legislative co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve instruction is less binding than other judgments/orders of the Supreme Court, or that the judgment/order loses force if the executive instruction is replaced by law. 22) He also referred to the decision in the case of Madan Mohan Pathak v. Union of India (AIR 1978 SC 803), wherein the direction of the Calcutta High Court to pay bonus to Class-III and Class-IV employees was sought to be nullified by a statutory amendment. This was held to be impermissible by the seven Judges' Bench. He also relied upon Bakhtawar Trust v. M.D. Narayan (2003) 5 SCC 298), wherein, after citing the case-laws on this point, the Court reiterated the principle as follows: ""25. The decisions referred to above, manifestly show that it is open to the legislature to alter the law retrospectively, provided the alteration is made in such a manner that it would no more be possible for the Court to arrive at the same verdict. In other words, the very premise of the earlier judgment should be uprooted, thereby resulting in a fundamental change of the circumstances upon which it was founded. xxx xxx xxx 27. Here, the question before us is, whether the impugned Act has passed the test of constitutionality b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile Section 139AA impermissibly attempted to overturn them without taking away their basis. Indeed, Parliament did not even sof ar as include a non-obstante clause in Section 139AA, which would have made it clear that Section would override contrary laws - clearly indicating once again that Section 13AA was not taking away the basis of the Court's orders. The emphasis of Mr. Datar is that unless suitable/appropriate amendments are made to the Aadhaar Act, the orders of the Court cannot be overruled by the newly inserted Section 139AA. 26) On the aforesaid edifice, the argument built and developed by Mr. Datar is that although the power of Parliament to pass laws with respect to List-I and List-III is plenary, it is subject to two implied limitations: (i) Parliament or any State legislature cannot pass any law that overrules a judgment; before any law is passed which may result in nullifying a decision, it is mandatory to remove the basis of the decision. Once the basis on which the earlier decision/order/judgment is delivered is removed, Parliament can then pass a law prospectively or retrospectively and with or without a validation clause. (ii) Implied limitation not to pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the twin-test of classification which according to him is not satisfied because there is no rational nexus with the object sought to be achieved. 29) Third argument of Mr. Datar was that the affected persons by Section 139AA are individuals who are professionals like lawyers, doctors, architects etc. and lakhs of businessmen having small or micro enterprises. By imposing a draconian penalty of cancelling their PAN cards and deeming that they had never applied for them, there is a direct infringement to Article 19(1)(g). The consequences of not having a PAN card results in a virtual "civil death" and it will be impossible to carry out any business or professional activity under Rule 114B of the Income Tax Rules, 1962 (hereinafter referred to as the 'Rules'), it will not be possible to operate bank accounts with transactions above Rs. 50,000/-, use credit/debit cards, purchase motor-vehicles, purchase property etc. 30) Elaborating this point, it was submitted by him that once it is shown that the right under Article 19(1)(g) has been infringed, the burden shifts to the State to show that the restriction is reasonable, and in the interests of the public, under Article 19(6) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to sustain the presumption of constitutionality the court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation;..." 33) Basic premise of the submissions of Mr. Shyam Divan, learned senior advocate, was also the same as projected by Mr. Datar. He insisted that Section 139AA of the Act, which had made Aadhaar mandatory for income-tax assessees, is unconstitutional. However, in his endeavour to plead that the provision be declared unconstitutional, he approached the subject from an altogether different premise, giving another perception to the whole issue. His basic submission was that every individual or citizen in this country had complete control over his/her body and State cannot insist any person from giving his/her finger tips or iris of eyes, as a condition precedent to enjoy certain rights. He pointed out that all the petitioners in his writ petition were holding PAN Cards and were income-tax assessees but had not enrolled under Aadhaar Scheme. They were the consentions persons in the society and did not want to give away the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) Section 139AA of the Act is contrary to the concept of 'limited Government'. (ii) The impugned provision coerces the individuals to part with their private information which was a part of human dignity and, thus, the said provision was violative of Article 21 of the Constitution as it offended human dignity. (iii) The impugned provision creates the involvement which can be used for surveillance. (iv) This provision converts right under Aadhaar Act to duty under the Income Tax Act. 35) Elaborating on the argument predicated on the concept of 'Limited Government', Mr. Divan submitted that the Constitution of India was the basic law or grundnorm which ensures democratic governance in this country. Though a sovereign country, its governance is controlled by the provisions of the Constitution which sets parameters within which three wings of the State, namely, Legislature, Executive and Judiciary has to function. Thus, no wing of the State can breach the limitations provided in the Constitution which employs an array of checks and balances to ensure open, accountable government where each wing of the State performs its actions for the benefit of the people and within its sph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract from that rule. Article 358 expressly authorises the State to take legislative or executive action provided such action was competent for the State to make or take, but for the provisions contained in Part III of the Constitution. Article 358 does not purport to invest the State with arbitrary authority to take action to the prejudice of citizens and others: it merely provides that so long as the proclamation of emergency subsists laws may be enacted, and exclusive action may be taken in pursuance of lawful authority, which if the provisions of Article 19 were operative would have been invalid. Our federal structure is founded on certain fundamental principles: (1) the sovereignty of the people with limited Government authority i.e. the Government must be conducted in accordance with the will of the majority of the people. The people govern themselves through their representatives, whereas the official agencies of the executive Government possess only such powers as have been conferred upon them by the people; (2) There is a distribution of powers between the three organs of the State - legislative, executive and judicial - each organ having some check direct or indirect on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tance, pensions and benefits under government schemes without having to part with his or her personal biometrics. An individual's biometrics such as finger prints and iris scan are the property and entitlement of that individual and the State cannot coerce an individual or direct him or her to part with biometrics as a condition for the exercise of rights or the enjoyment of entitlements. Every citizen has a basic right to informational self-determination and the state cannot exercise dominion over a citizen's proprietary information either in individual cases or collectively so as to place itself in a position where it can aggregate information and create detailed profiles of individuals or facilitate this process. The Constitution of India is not a charter for a Police State which permits the State to maintain cradle to grave records of the citizenry. No democratic country in the world has devised a system similar to Aadhaar which operates like an electronic leash to tether every citizen from cradle to grave. There can be no question of free consent in situations where an individual is being coerced to part with its biometric information (a) to be eligible for welfare schemes of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to determine what shall be done with his own body. In the case of medical treatment, for example, a surgeon who performs an operation without the patient's consent commits assault or battery. It follows as a corollary that the patient possesses the right not to consent i.e. to refuse treatment. (In the United States this right is reinforced by a constitutional right of privacy). This is known as the principle of self-determination or informed consent. Mr Andhyarujina submitted that the principle of self-determination applies when a patient of sound mind requires that life support should be discontinued. The same principle applies where a patient's consent has been expressed at an earlier date before he became unconscious or otherwise incapable of communicating it as by a "living will" or by giving written authority to doctors in anticipation of his incompetent situation. xxx xxx xxx 93. Rehnquist, C.J. noted that in law even touching of one person by another without consent and without legal justification was a battery, and hence illegal. The notion of bodily integrity has been embodied in the requirement that informed consent is generally required for medical treatment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubs, service providers, travel companies, etc. will all utilise the Aadhaar data base and may also insist upon an Aadhaar number or Aadhaar authentication. This would mean that at every stage in an individual's daily activity his or her presence could be traced to a location in real time. One of the purposes of Aadhaar as projected by the respondents is that it will be a single point verification for KYC (Know Your Customer). This is permissible and indeed contemplated by the impugned Act. Given the very poor quality of scrutiny of documents by private enrollers and enrollment agencies (without any governmental supervision) means that the more rigorous KYC process at present being employed by banks and other financial institutions will yield to a system which depends on a much weaker data base. This would eventually imperil the integrity of the financial system and also threaten the economic sovereignty of the nation. According to him, Aadhaar Act does not serve as an identity as incorrectly projected by the respondents but serves as a method of identification. Every citizen-state and citizen-service provider interaction requiring identification is sought to be captured and retaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to be reasonable must satisfy two tests: (i) the classification must be founded on intelligible differentia and (ii) the differentia must have a rational relation with the object sought to be achieved by the legislation in question. In this connection it must be borne in mind that the object itself should be lawful. The object itself cannot be discriminatory, for otherwise, for instance, if the object is to discriminate against one section of the minority the discrimination cannot be justified on the ground that there is a reasonable classification because it has rational relation to the object sought to be achieved. 41) He also relied upon the judgment in the case of Subramanian Swamy v. Director, Central Bureau of Investigation & Anr. (2014) 8 SCC 682). Paras 58 and 59 reads as under: "58. The Constitution permits the State to determine, by the process of classification, what should be regarded as a class for purposes of legislation and in relation to law enacted on a particular subject. There is bound to be some degree of inequality when there is segregation of one class from the other. However, such segregation must be rational and not artificial or evasive. In other word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey are. Argument was that Section 139AA be read down to hold that it is only voluntary provision by taking out the sting of mandatoriness contained therein and there is no compulsion on any person to give Aadhaar number. 43) We may mention at this stage itself that on conclusion of his arguments, Mr. Divan was put a specific query that most of the arguments presented by him endeavoured to project aesthetics of law and jurisprudence which had the shades of 'Right to Privacy' jurisprudence which could not be gone into by this Bench as this very aspect was already referred to the Constitution Bench. Mr. Divan was candid in accepting this fact and his submission was that in these circumstances, the option for this Bench was to stay the operation of proviso to sub-section (2) of Section 139AA of the Act till the decision is rendered by the Constitution Bench. 44) Mr. Salman Khurshid, learned senior counsel who appeared in Writ Petition (Civil) No. 247 of 2017, while adopting the arguments of Mr. Datar and Mr. Divan, made an additional submission, invoking the principle of right to live with dignity which, according to him, was somewhat different from the Right to Privacy. He submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... courts in Germany, therefore, see human dignity as a fundamental principle within the system of the basic rights. This is how the doctrine of basic structure stands evolved under the German Constitution and by interpretation given to the concept by the constitutional courts." 45) After explaining the aforesaid distinction between the two concepts, Mr. Khurshid argued that the impugned provision in the Income Tax Act was violative of right to live with dignity guaranteed under Article 21 of the Constitution. He submitted that Right to Life and Liberty mentioned in Article 21 of the Constitution encompasses within its right to live with dignity as has been held in catena of cases by this Court. He explained in detail as to how the concept of dignity was dealt with by different jurists from time to time including Kant who identified dignity with autonomy and Dworkin who exemplified the doctrine of dignity on the conception of living well, which itself is based on two principles of dignity, namely, self respect and authenticity. In this sense, he submitted that living with dignity involves giving importance to living our life well and acting independently from the personal sense of ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, nor has it been narrowly tailored to meet the object, if any. 47) In this hue, he also submitted that Section 139AA of the Act violates the Rule of Law. Elaborating his argument, he submitted that a legal system which in general observes the rule of law treats its people as persons, in the sense that it attempts to guide their behaviour through affecting the circumstances of their action. It, thus, presupposes that they are rational autonomous creatures and attempts to affect their actions and habits by affecting their deliberations. It satisfies men's craving for reasonable certainty of form as well as substance, and for dignity of process as well as dignity of result. On the other hand, when the rule of law is violated, it may be either in the form of leading to uncertainty or it may lead to frustrated and disappointed expectations. It leads to the first when the law does not enable people to foresee future developments or to form definite expectations. It leads to frustrated expectations when the appearance of stability and certainty which encourages people to rely and plan on the basis of the existing law is shattered by retroactive law-making or by preventing proper law-e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e identity of the citizens will be reduced to a collection of instrumentalised markers. Further, the organisations and authorities allowed to conduct it should be strictly defined. There has to be a strict control over any systematic use of common identifiers. No such re-grouping of data can be allowed as could lead to the use of biometrics for exclusion of vulnerable groups. Brown considers surveillance as both a discursive and a material practice that reifies bodies around divisive lines. Surveillance of certain communities has been both social as well as political norm. He further submitted that this Court cannot lose sight of the fact that the data collected under the impugned provision may be used to carry out discriminatory research and sort subjects into groups for specific reasons. The fact that the impugned provision creates an apprehension in the minds of the people, legitimate and reasonable enough with no preventive mechanism in place, is in itself a violation of the right to life and personal liberty as enshrined under the Constitution. 49) Mr. Anando Mukherjee, learned counsel, appeared in Writ Petition (Civil) No. 304 of 2017, while reiterating the submissions of ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that there appears to be certain amount of apparent unresolved contradiction in the law declared by this Court." Notwithstanding these preliminary remarks, he rebutted the said argument based on Article 21, including Right to Privacy, by raising a plea that Right to Privacy/Personal Autonomy/Bodily Integrity is not absolute. He referred to the judgment of the United States Supreme Court in Roe v. Wade (410 U.S. 113 (1973) wherein it was held: "The privacy right involved, therefore, cannot be said to be absolute. In fact, it is not clear to us that the claim asserted by some amici that one has an unlimited right to do with one's body as one pleases bears a close relationship to the right of privacy previously articulated in the Court's decisions. The Court has refused to recognise an unlimited right of this kind in the past." He also relied upon the judgment of this Court in Sharda v. Dharmpal (2003) 4 SCC 493) where the Court held that a matrimonial court has the power to order a person to undergo medical test. Passing of such an order by the court would not be in violation of the right to personal liberty under Article 21 of the Indian Constitution. 51) His second prelimi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onomic regulations are concerned {See - Secretary to Government of Madras & Anr. v. P.R. Sriramulu & Anr. (1996) 1 SCC 345), paragraph 15) and that mala fides cannot be attributed to the Parliament, as held in G.C. Kanungo v. State of Orissa (1995) 5 SCC 96), (paragraph 11). Also, the courts approached the issue with the presumption of constitutionality in mind and that Legislature intends and correctly appreciates the need of its own people, as held in Mohd. Hanif Quareshi & Ors. v. State of Bihar (AIR 1958 SC 731) (paragraph 15). 55) On merits, the argument of Mr. Rohatgi was that once the aforesaid basic parameters are kept in mind, the impugned provision passes the muster of constitutionality. Adverting to the issue of legislative competence, he referred to Article 246 and 248 of the Constitution as well as Entry 82 and Entry 97 of List-I of Schedule-VII of the Constitution which empowers the Parliament to legislate on the subject pertaining to income-tax. Therefore, it could not be said that the impugned provision made was beyond the competence of the Parliament. He also submitted that in any case residuary power lies with the Parliament and this power to legislate is plenary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a scheme in administrative/executive domain and the Court was considering the validity of Aadhaar scheme in that hue/background. Those orders have not been passed in the context of examining the validity of any legislative measure. Thirdly, no final view is taken in the form of any judgment that Aadhaar is unconstitutional and, therefore, there is no basis in existence which was required to be removed. Fourthly, the Parliament was competent to pass the law and provide statutory framework to give legislative backing to Aadhaar in the absence of any such law which existed at that time. He, thus, submitted that there was no question of curing the alleged basis of judgment/interim orders by legislation. He specifically relied upon the following passage from the judgment in the case of Goa Foundation & Anr. v. State of Goa & Anr. (2016) 6 SCC 602): "24. The principles on which first question would require to be answered are not in doubt. The power to invalidate a legislative or executive act lies with the Court. A judicial pronouncement, either declaratory or conferring rights on the citizens cannot be set at naught by a subsequent legislative act for that would amount to an encroachm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als exceeds 113 crores whereas total number of PAN for individuals is around 29 crore. Therefore, whereas the Aadhaar Act applies to the entire population, the Income Tax Act applies to a much smaller sub-set of the population, i.e. the tax payers. In order to ensure One Pan to One Person, Aadhaar can be the sole criterion for allotment of PAN to individuals only after all existing PAN are seeded with Aadhaar and quoting of Aadhaar is mandated for new PAN applications. Counter affidavit filed by the Union of India also gives the following instances of misuse of PAN: (a) In NSDL scame of 2006, about one lakh bogus bank and demat accounts were opened through use of PANs. The real PAN owners were not aware of these accounts. (b) As Banks progressively started insisting on PANs for opening of bank accounts, unscrupulous operators managed multiple PANs for providing entries and operating undisclosed accounts for making financial transactions. (c) Entry operators manage a large number of shell companies using duplicate PANs or PANs issued in the name of dummy directors and name lenders. As the persons involved as bogus directors are usually the same set of persons, linkage with A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng loss to the revenue to the tune of thousands of crores. (iii) Another objective is to curb the menace of shell companies. It is submitted in this regard that PAN is a basis of all the requirements in the process of incorporation of a company. Even an artificial juridical person like a company is granted PAN. It is required as an ID proof for incorporation of a company, applying for DIN, digital signature etc. PAN is also required for opening a bank account in the name of a company or individuals. Basic documents required for obtaining a PAN are ID proof and address proof. It has been observed that these documents which are a basis of issuance of PAN could easily be forged and, therefore, PAN cards issued on the basis of such forged documents cannot be genuine and it can be used for various financial frauds/crime. Aadhaar will ensure that there is no duplication of identity as biometric will not allow that. If at the time of opening of bank accounts itself, the more robust identity proof like Aadhaar had been used in place of PAN, the menace of mushrooming of non-descript/shell/jamakharchi/bogus companies would have been prevented. There is involvement of natural person in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. The procedure for application for PAN is prescribed in Rule 114 of the Rules. The forms prescribed for PAN application are 49A and 49AA for Indian and Foreign Citizens/Entities. Quoting of PAN has been mandated for certain transactions above specified threshold value in Rule 114B of the Rules. (c) Uniqueness of PAN - For achieving the objective of one PAN to one assessee, it is required to maintain uniqueness of PAN. The uniqueness of PAN is achieved by conducting a de-duplication check on all already existing allotted PAN against the data furnished by new applicant. Under the existing system of PAN only demographic data is captured. De-duplication process is carried out using a Phonetic Algorithm whereby a Phonetic PAN (PPAN) is created in respect of each applicant using the data of applicant's name, father's name, date of birth, gender and status. By comparison of newly generated PPAN with existing set of PPANs of all assessees duplicate check is carried out and it is ensured that same person does not acquire multiple PANs or one PAN is not allotted to multiple persons. Due to prevalence of common names and large number of PAN holders, the demographic way of de-duplic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India (2011) 14 SCC 331) has approved the recommendations of the High Powered Committee headed by Justice D.P. Wadhwa, which recommended linking of Aadhaar with PDS and encouraged State Governments to adopt the same. 62) This Court in State of Kerala & others vs. President, Parents Teachers Association, SNVUP and Others (2013) 2 SCC 705) has directed use of Aadhaar for checking bogus admissions in schools with the following observations: "18. We are, however, inclined to give a direction to the Education Department, State of Kerala to forthwith give effect to a circular dated 12.10.2011 to issue UID Card to all the school children and follow the guidelines and directions contained in their circular. Needless to say, the Government can always adopt, in future, better scientific methods to curb such types of bogus admissions in various aided schools." 63) While monitoring the PILs relating to night shelters for the homeless and the right to food through the public distribution system, this Court has lauded and complimented the efforts of the State Governments for inter alia carrying out bio-metric identification of the head of family of each household to eliminate fictitious, bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmission was that proportionality supplanting traditional review in European Court of Human Rights cases and not remaining applicable in traditional judicial review claims has caused immense confusion in British pubic law. Narrating the structure of Article 19, submission of Mr. Sengupta was that freedoms which were enlisted under Article 19(1) were not the absolute freedoms and they were subject to reasonable restrictions, as provided under sub-article (2) to (6) of Article 19 itself. It is because of this reason, while examining as to whether a particular measure violated any of the freedoms or was a reasonable restriction, balancing exercise was to be done by the courts and this balancing exercise brings the element of proportionality. However, this was not envisaged in Article 14 at all. 69) Coming to the impugned provision and referring to the penal consequences provided in proviso to Section 139AA(2), he argued that the test of whether penalty is proportionate is not the same as the doctrine of proportionality. Proportionate penalty is an incident of arbitrariness whereas there cannot be any arbitrariness qua a statute. He also submitted that on facts penalty provided in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion was violative of Article 21, based his submission on Right to Human Dignity as a facet of Article 21. He also emphasised that the concept of human dignity was different from Right to Privacy. We have taken note of these arguments above. However, we feel all these aspects argued by the petitioners overlap with privacy issues as different aspects of Article 21 of the Constitution. Right to Let Alone has the shades of Right to Privacy and it is so held by the Court in R. Rajagopal & Anr. v. State of Tamil Nadu & Ors.( 1994) 6 SCC 632): "26. We may now summarise the broad principles flowing from the above discussion: (1) The right to privacy is implicit in the right to life and liberty guaranteed to the citizens of this country by Article 21. It is a "right to be let alone". A citizen has a right to safeguard the privacy of his own, his family, marriage, procreation, motherhood, child-bearing and education among other matters. None can publish anything concerning the above matters without his consent - whether truthful or otherwise and whether laudatory or critical. If he does so, he would be violating the right to privacy of the person concerned and would be liable in an act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g governmental power are concerned, they cannot maintain a suit for damages for defaming them. (5) Rules 3 and 4 do not, however, mean that Official Secrets Act, 1923, or any similar enactment or provision having the force of law does not bind the press or media. (6) There is no law empowering the State or its officials to prohibit, or to impose a prior restraint upon the press/media." So is the Right to Informational Self Determination, as specifically spelled out by US Supreme Court in United States Department of Justice v. Reporters Committee for Freedom of the Press (489 U.S. 749 (1989). Because of the aforesaid reasons and keeping in mind the principle of judicial discipline, we have made conscious choice not to deal with these aspects and it would be for the parties to raise these issues before the Constitution Bench. Accordingly, other arguments based on Articles 14 and 19 of the Constitution as well as competence of the legislature to enact such law are being examined. 72) We have deeply deliberated on the arguments advanced by various counsel appearing for different petitioners as well as counter submissions made by counsel appearing on behalf of the State. Undoubte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iolated or not. The basis of the aforesaid statement lies in Article 13(2) of the Constitution which proscribes the State from making 'any law which takes away or abridges the right conferred by Part III', enshrining fundamental rights. It categorically states that any law made in contravention thereof, to the extent of the contravention, be void. 74) We can also take note of Article 372 of the Constitution at this stage which applies to pre-constitutional laws. Article 372(1) reads as under: "372. Continuance in force of existing laws and their adaptation.- (1) Notwithstanding the repeal by this Constitution of the enactments referred to in article 395 but subject to the other provisions of this Constitution, all the law in force in the territory of India immediately before the commencement of this Constitution shall continue in force therein until altered or repealed or amended by a competent Legislature or other competent authority." In the context of judicial review of legislation, this provision gives an indication that all laws enforced prior to the commencement of the Constitution can be tested for compliance with the provisions of the Constitution by Courts. Such a po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as violative of Article 14, it can be struck down only if it is found that it is violative of the equality clause/equal protection clause enshrined therein. Similarly, if an enactment is challenged as violative of any of the fundamental rights guaranteed by sub-clauses (a) to (g) of Article 19(1), it can be struck down only if it is found not saved by any of the clauses (2) to (6) of Article 19 and so on. No enactment can be struck down by just saying that it is arbitrary or unreasonable. Some or the other constitutional infirmity has to be found before invalidating an Act. An enactment cannot be struck down on the ground that court thinks it unjustified. Parliament and the legislatures, composed as they are of the representatives of the people, are supposed to know and be aware of the needs of the people and what is good and bad for them. The court cannot sit in judgment over their wisdom." (emphasis supplied) 26. In Mohd. Hanif Quareshi, the Constitution Bench further observed that there was always a presumption in favour of constitutionality of an enactment and the burden is upon him, who attacks it, to show that there has been a clear violation of the constitutional princip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; Gopal Narain v. State of U.P.; Ganga Sugar Corpn. Ltd. v. State of U.P.; R.K. Garg v. Union of India; and State of W.B. v. E.I.T.A. India Ltd." 76) Again in Ashok Kumar Thakur v. Union of India & Ors. (2008) 6 SCC 1), this Court made the following pertinent observations: "219. A legislation passed by Parliament can be challenged only on constitutionally recognised grounds. Ordinarily, grounds of attack of a legislation is whether the legislature has legislative competence or whether the legislation is ultra vires the provisions of the Constitution. If any of the provisions of the legislation violates fundamental rights or any other provisions of the Constitution, it could certainly be a valid ground to set aside the legislation by invoking the power of judicial review. A legislation could also be challenged as unreasonable if it violates the principles of equality adumbrated in our Constitution or it unreasonably restricts the fundamental rights under Article 19 of the Constitution. A legislation cannot be challenged simply on the ground of unreasonableness because that by itself does not constitute a ground. The validity of a constitutional amendment and the validity of plena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an enactment is challenged as violative of any of the fundamental rights guaranteed by clauses (a) to (g) of Article 19(1), it can be struck down only if it is found not saved by any of the clauses (2) to (6) of Article 19 and so on. No enactment can be struck down by just saying that it is arbitrary or unreasonable. Some or other constitutional infirmity has to be found before invalidating an Act. An enactment cannot be struck down on the ground that court thinks it unjustified. Parliament and the legislatures, composed as they are of the representatives of the people, are supposed to know and be aware of the needs of the people and what is good and bad for them. The court cannot sit in judgment over their wisdom. In this connection, it should be remembered that even in the case of administrative action, the scope of judicial review is limited to three grounds, viz., (i) unreasonableness, which can more appropriately be called irrationality, (ii) illegality and (iii) procedural impropriety (see Council of Civil Service Unions v. Minister for Civil Service [1985 AC 374 : (1984) 3 All ER 935 : (1984) 3 WLR 1174] which decision has been accepted by this Court as well). The applicabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot strike down a statute or a statutory provision, especially when the right to property is no more a fundamental right. Otherwise the court will be substituting its wisdom to that of the legislature, which is impermissible in our constitutional democracy." A fortiorari, a law cannot be invalidated on the ground that the Legislature did not apply its mind or it was prompted by some improper motive. 80) It is, thus, clear that in exercise of power of judicial review, Indian Courts are invested with powers to strike down primary legislation enacted by the Parliament or the State legislatures. However, while undertaking this exercise of judicial review, the same is to be done at three levels. In the first stage, the Court would examine as to whether impugned provision in a legislation is compatible with the fundamental rights or the Constitutional provisions (substantive judicial review) or it falls foul of the federal distribution of powers (procedural judicial review). If it is not found to be so, no further exercise is needed as challenge would fail. On the other hand, if it is found that Legislature lacks competence as the subject legislated was not within the powers assigned i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Legislatures of the State is primarily contained in Articles 245 to 254 of the Constitution. Therefore, it cannot be disputed that each wing of the State to act within the sphere delineated for it under the Constitution. It is correct that crossing these limits would render the action of the State ultra vires the Constitution. When it comes to power of taxation, undoubtedly, power to tax is treated as sovereign power of any State. However, there are constitutional limitations briefly described above. In a nine Judge Bench decision of this Court in Jindal Stainless Ltd. & Anr. v. State of Haryana & Ors. (2016) 11 Scale 1) discussion on these constitutional limitations are as follows: "20. Exercise of sovereign power is, however, subject to Constitutional limitations especially in a federal system like ours where the States also to the extent permissible exercise the power to make laws including laws that levy taxes, duties and fees. That the power to levy taxes is subject to constitutional limitations is no longer res-integra. A Constitution Bench of this Court has in Synthetics and Chemicals Ltd. v. State of U.P. (1990) 1 SCC 109 recognised that in India the Centre and the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the exclusion of the State legislatures, and the States' power to levy taxes limited to what is specifically reserved in their favour and no more. 22. Article 249 similarly empowers the Parliament to legislate with respect to a matter in the State List for national interest provided the Council of States has declared by a resolution supported by not less than two-thirds of the members present and voting that it is necessary or expedient in national interest to do so. The power is available till such time any resolution remains in force in terms of Article 249(2) and the proviso thereunder. 23. Article 250 is yet another provision which empowers the Parliament to legislate with respect to any matter in the State List when there is a proclamation of emergency. In the event of an inconsistency between laws made by Parliament under Articles 249 and 250, and laws made by legislature of the States, the law made by Parliament shall, to the extent of the inconsistency, prevail over the law made by the State in terms of Article 251. 24. The power of Parliament to legislate for two or more States by consent, in regard to matters not otherwise within the power of the Parliament is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... One of the aforesaid ingredients needs to be established by the petitioners in order to succeed. 86) Even in the case of Thakur Bharath Singh (Footnote 9 above) relied upon by Mr. Divan, wherein executive order was passed imposing certain restrictions requiring the respondent therein to reside at a particular place as specified in the order, which was passed in exercise of powers contained under Section 3(1)(b) of the M.P. Public Security Act, 1959, the Court struck down and quashed the order only after it found that restrictions contained therein were unreasonable and violative of fundamental freedom guaranteed under Article 19(1)(d) and (e) of the Constitution of India. 87) With this, we proceed to consider the arguments on which vires of the impugned provisions are questioned: Argument of Legislative Competence 88) It is not denied by the petitioners that having regard to the provisions of Article 246 of the Constitution and Entries 82 and 97 of List I, the Parliament has requisite competence to enact the impugned legislation. However, the submission of the petitioners was that the impugned legislative provision was made as per which enrolment under Aadhaar had become manda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been assigned as it may take some time to give Aadhaar card. Therefore, this proviso is only by way of an interim measure till Aadhaar number is assigned, which is otherwise compulsory for obtaining certain benefits as stated in Section 7 of the Aadhaar Act. Fact remains that as per the Government and UIDAI itself, the requirement of obtaining Aadhaar number is voluntary. It has been so claimed by UIDAI on its website and clarification to this effect has also been issued by UIDAI. 91) Thus, enrolment under Aadhaar is voluntary. However, it is a moot question as to whether for obtaining benefits as prescribed under Section 7 of the Aadhaar Act, it is mandatory to give Aadhaar number or not is a debatable issue which we are not addressing as this very issue is squarely raised which is the subject matter of other writ petition filed and pending in this Court. 92) On the one hand, enrollment under Aadhaar card is voluntary, however, for the purposes of Income Tax Act, Section 139AA makes it compulsory for the assessees to give Aadhaar number which means insofar as income tax assessees are concerned, they have to necessarily enroll themselves under the Aadhaar Act and obtain Aadh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, as discovered on scrutiny, determines the legislative intent as to whether the earlier law shall cease or shall only be supplemented. If the objects of the two statutory provisions are different and the language of each statute is restricted to its own objects or subject, then they are generally intended to run in parallel lines without meeting and there would be no real conflict though apparently it may appear to be so on the surface. Statutes in pari materia although in apparent conflict, should also, so far as reasonably possible, be construed to be in harmony with each other and it is only when there is an irreconcilable conflict between the new provision and the prior statute relating to the same subject-matter, that the former, being the later expression of the legislature, may be held to prevail, the prior law yielding to the extent of the conflict. The same rule of irreconcilable repugnancy controls implied repeal of a general by a special statute. The subsequent provision treating a phase of the same general subject-matter in a more minute way may be intended to imply repeal protanto of the repugnant general provision with which it cannot reasonably co-exist. When ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that the basis on which the aforesaid orders are passed has to be removed, which is not done. According to the petitioners, it could be done only by making Aadhaar Act compulsory. It is difficult to accept this contention for two reasons: first, when the orders passed by this Court which are relied upon by the petitioners were passed when Aadhaar Act was not even enacted. Secondly, as already discussed in detail above, Aadhaar Act and the law contained in Section 139AA of the Income Tax Act deal with two different situations and operate in different fields. This argument of legislature incompetence also, therefore, has fails. Whether Section 139AA of the Act is discriminatory and offends Article 14 of the Constitution of India? Article 14, which enshrines the principle of equality as a fundamental right mandates that the State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India. It, thus, gives the right to equal treatment in similar circumstances, both in privileges conferred and in the liabilities imposed. In Sri Srinavasa Theatre & Ors. v. Government of Tamil Nadu & Ors. (1992) 2 SCC 643), this Court explain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of classification must have a rational or reasonable nexus with the object sought to be achieved by the statute in question. Thus, Article 14 in its ambit and sweep involves two facets, viz., it permits reasonable classification which is founded on intelligible differentia and accommodates the practical needs of the society and the differential must have a rational relation to the objects sought to be achieved. Further, it does not allow any kind of arbitrariness and ensures fairness and equality of treatment. It is the fonjuris of our Constitution, the fountainhead of justice. Differential treatment does not per se amount to violation of Article 14 of the Constitution and it violates Article 14 only when there is no reasonable basis and there are several tests to decide whether a classification is reasonable or not and one of the tests will be as to whether it is conducive to the functioning of modern society. 97) Insofar as the impugned provision is concerned, Mr. Datar had conceded that first test that of reasonable classification had been satisfied as he conceded that individual assesses form a separate class and the impugned provision which targeted only individual asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enumerated. Furthermore, even when we address the issue of shell companies, fact remains that companies are after all floated by individuals and these individuals have to produce documents to show their identity. It was sought to be argued that persons found with duplicate/bogus PAN cards are hardly 0.4% and, therefore, there was no need to have such a provision. We cannot go by percentage figures. The absolute number of such cases is 10.52 lakh, which figure, by no means, can be termed as miniscule, to harm the economy and create adverse effect on the nation. Respondents have argued that Aadhaar will ensure that there is no duplication of identity as bio-metric will not allow that and, therefore, it may check the growth of shell companies as well. 100) Having regard to the aforesaid factors, it cannot be said that there is no nexus with the objective sought to be achieved. 101) Another argument predicated on Article 14 advanced by Mr. Divan was that it was discriminatory in nature as it created two classes; one class of those who volunteered to enrol themselves under Aadhaar scheme and other class of those who did not want it to be so. It was further submitted that in this manne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y also be pointed out that the counsel for the respondents had argued that doctrine of proportionality cannot be read into Article 14 of the Constitution and in support reliance has been placed on the judgment of this Court in E.P. Royappa v. State of Tamil Nadu & Anr. (1974) 4 SCC 3). This aspect need not be considered in detail inasmuch as Mr. Datar, learned counsel appearing for the petitioner, had conceded at the Bar that he had invoked the doctrine of proportionality only in the context of Article 19(1)(g). 105) We, therefore, reject the argument founded on Article 14 of the Constitution. Whether impugned provision is violative of Article 19(1)(g) 106) Invocation of provisions of Article 19(1)(g) of the Constitution by the petitioners was in the context of proviso to sub-section (2) of Section 139AA of the Act which contains the consequences of the failure to intimate the Aadhaar number to such authority in such form and manner as may be prescribed and reads as under: "(2) Every person who has been allotted permanent account number as on the 1st day of July, 2017, and who is eligible to obtain Aadhaar number, shall intimate his Aadhaar number to such authority in such for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5(D) and sub-section (6) of Section 139A. These provisions read as under: "5. Every person shall - (a) quote such number in all his returns to, or correspondence with, any income-tax authority; (b) quote such number in all challans for the payment of any sum due under this Act; (c) quote such number in all documents pertaining to such transactions as may be prescribed by the Board in the interests of the revenue, and entered into by him: Provided that the Board may prescribe different dates for different transactions or class of transactions or for different class of persons: Provided further that a person shall quote General Index Register Number till such time Permanent Account Number is allotted to such person; (d) intimate the Assessing Officer any change in his address or in the name and nature of his business on the basis of which the permanent account number was allotted to him. (5A) Every person receiving any sum or income or amount from which tax has been deducted under the provisions of Chapter XVIIB, shall intimate his permanent account number to the person responsible for deducting such tax under that Chapter: Provided further that a person referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in accordance with the provisions of sub-section (3) of section 206C. (6) Every person receiving any document relating to a transaction prescribed under clause (c) of sub-section (5) shall ensure that the Permanent Account Number or the General Index Register Number has been duly quoted in the document." 110) Sub-section (8) empowers the Board to make Rules, inter alia, prescribing the categories of transactions in relation to which PAN is to be quoted. Rule 114B of the Rules lists the nature of transaction in sub-rule (a) to (r) thereof where PAN number is to be given. 111) According to the petitioners, it amounts to violating their fundamental right to carry on business/profession etc. as enshrined under Article 19(1)(g) of the Constitution which stands infringed and, therefore, it was for the State to show that the restriction is reasonable and in the interest of pubic under Article 19(6) of the Constitution. It is in this context, principle of proportionality has been invoked by the petitioners with their submission that restriction is unreasonable as it is utterly disproportionate for committing breach of Section 139AA of the Act. 112) As noted above, Mr. Datar had rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imited to giving this number in the income-tax returns or for other acts to be performed under the Act, as mentioned in sub-sections (5), (5A), (5B), 5(C), 5(D) and 6 of Section 139A. Rule 114B of the Rules mandates quoting of this PAN in various other documents pertaining to different kinds of transactions listed therein. It is for sale and purchase of immovable property valued at Rs. 5 lakhs or more; sale or purchase of motor vehicle etc., while opening deposit account with a sum exceeding Rs. 50,000/- with a banking company; while making deposit of more than Rs. 50,000/- in any account with Post Office, savings bank; a contract of a value exceeding Rs. 1 lakh for sale or purchase of securities as defined under the Securities Contract (Regulation) Act, 1956; while opening an account with a banking company; making an application for installation of a telephone connection; making payment to hotels and restaurants when such payment exceeds Rs. 25,000/- at any one time; while purchasing bank drafts or pay orders for an amount aggregating Rs. 50,000/- or more during any one day, when payment in cash; payment in cash in connection with travel to any foreign country of an amount exceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrying on any occupation, trade or business, or (ii) the carrying on by the State, or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise." 60. Another significant feature which can be noticed from the reading of the aforesaid clause is that the State is empowered to make any law relating to the professional or technical qualifications necessary for practising any profession or carrying on any occupation or trade or business. Thus, while examining as to whether the impugned provisions of the statute and rules amount to reasonable restrictions and are brought out in the interest of the general public, the exercise that is required to be undertaken is the balancing of fundamental right to carry on occupation on the one hand and the restrictions imposed on the other hand. This is what is known as "doctrine of proportionality". Jurisprudentially, "proportionality" can be defined as the set of rules determining the necessary and sufficient conditions for limitation of a constitutionally protected right by a law to be constitutionally permissible. According to Aharon Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that democracy is based on a balance between constitutional rights and the public interests. In fact, such a provision in Article 19 itself on the one hand guarantees some certain freedoms in clause (1) of Article 19 and at the same time empowers the State to impose reasonable restrictions on those freedoms in public interest. This notion accepts the modern constitutional theory that the constitutional rights are related. This relativity means that a constitutional licence to limit those rights is granted where such a limitation will be justified to protect public interest or the rights of others. This phenomenon-of both the right and its limitation in the Constitution-exemplifies the inherent tension between democracy's two fundamental elements. On the one hand is the right's element, which constitutes a fundamental component of substantive democracy; on the other hand is the people element, limiting those very rights through their representatives. These two constitute a fundamental component of the notion of democracy, though this time in its formal aspect. How can this tension be resolved? The answer is that this tension is not resolved by eliminating the "losing" facet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ups. There are, in my view, three important components of a proportionality test. First, the measures adopted must be ... rationally connected to the objective. Second, the means ... should impair "as little as possible" the right or freedom in question ... Third, there must be a proportionality between the effects of the measures which are responsible for limiting the Charter right or freedom, and the objective which has been identified as of "sufficient importance". The more severe the deleterious effects of a measure, the more important the objective must be if the measure is to be reasonable and demonstrably justified in a free and democratic society." 64. The exercise which, therefore, is to be taken is to find out as to whether the limitation of constitutional rights is for a purpose that is reasonable and necessary in a democratic society and such an exercise involves the weighing up of competitive values, and ultimately an assessment based on proportionality i.e. balancing of different interests. 65. We may unhesitatingly remark that this doctrine of proportionality, explained hereinabove in brief, is enshrined in Article 19 itself when we read clause (1) along with cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumption in favour of the constitutionality of the Act will naturally arise." 116) Keeping in view the aforesaid parameters and principles in mind, we proceed to discuss as to whether the 'restrictions' which would result in terms of proviso to sub-section (2) of Section 139AA of the Act are reasonable or not. 117) Let us revisit the objectives of Aadhaar, and in the process, that of Section 139AA in particular. 118) By making use of the technology, a method is sought to be devised, in the form of Aadhaar, whereby identity of a person is ascertained in a flawless manner without giving any leeway to any individual to resort to dubious practices of showing multiple identities or fictitious identities. That is why it is given the nomenclature 'unique identity'. It is aimed at securing advantages on different levels some of which are described, in brief, below: (i) In the first instance, as a welfare and democratic State, it becomes the duty of any responsible Government to come out with welfare schemes for the upliftment of poverty stricken and marginalised sections of the society. This is even the ethos of Indian Constitution which casts a duty on the State, in the form of 'Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he progress of its real income, it has been overtaken in terms of social indicators by many of these countries, even within the region of South Asia itself (we go into this question more fully in Chapter 3, 'India in Comparative Perspective'). To point to just one contrast, even though India has significantly caught up with China in terms of GDP growth, its progress has been very much slower than China's in indicators such as longevity, literacy, child undernourishment and maternal mortality. In South Asia itself, the much poorer economy of Bangladesh has caught up with and overtaken India in terms of many social indicators (including life expectancy, immunization of children, infant mortality, child undernourishment and girls' schooling). Even Nepal has been catching up, to the extent that it now has many social indicators similar to India's, in spite of its per capita GDP being just about one third. Whereas twenty years ago India generally had the second-best social indicators among the six South Asia countries (India, Pakistan, Bangladesh, Sri Lanka, Nepal and Bhutan), it now looks second worst (ahead only of problem-ridden Pakistan). India has been climbing up the ladder of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es be interconnected. To the same effect is the recommendation of the Committee headed by Chairman, CBDT on measures to tackle black money in India and abroad which also discusses the problem of money-laundering being done to evade taxes under the garb of shell companies by the persons who hold multiple bogus PAN numbers under different names or variations of their names. That can be possible if one uniform proof of identity, namely, UID is adopted. It may go a long way to check and minimise the said malaise. (iii) Thirdly, Aadhaar or UID, which has come to be known as most advanced and sophisticated infrastructure, may facilitate law enforcement agencies to take care of problem of terrorism to some extent and may also be helpful in checking the crime and also help investigating agencies in cracking the crimes. No doubt, going by aforesaid, and may be some other similarly valid considerations, it is the intention of the Government to give phillip to Aadhaar movement and encourage the people of this country to enroll themselves under the Aadhaar scheme. 119) Wether such a scheme should remain voluntary or it can be made mandatory imposing compulsiveness on the people to be covere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acro level to analyse the gaps in the assessee base. Permanent Account Numbers (PANs) issued upto March 2009 and March 2010 were 807.9 lakh and 958 lakh respectively. The returns filled in 2008-09 and 2009-10 were 326.5 lakh and 340.9 lakh respectively. The gap between PANs and the number of returns filed was 617.1 lakh in 2009-10. The Board needs to identify the reasons for the gap and use this information for appropriately enhancing the assessee base. The gap may be due to issuance of duplicate PAN cards and death of some PAN card holders. The Department needs to put in place appropriate controls to weed out the duplicate PANs and also update the position in respect of deceased assessee. It is significant to note that the number of PAN card holders has increased by 117.7 per cent between 2005-06 to 2009-10 whereas the number of returns filed in the same period has increased by 14.4 per cent only. (emphasis supplied) The total direct tax collection has increased by 128.8 per cent during the period 2005-06 to 2009-10. The increase in the tax collection was around nine times as compared to increase in the assessee base. It should be the constant endeavour of the Department to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above Rs. 5 lakhs, 56 lakhs are in the salaried class. The number of people showing income more than 50 lakhs in the entire country is only 1.72 lakh. We can contrast this with the fact that in the last five years, more than 1.25 crore cars have been sold, and number of Indian citizens who flew abroad, either for business or tourism, is 2 crore in the year 2015. From all these figures we can conclude that we are largely a tax non-compliant society. The predominance of the cash in the economy makes it possible for the people to evade their taxes. When too many people evade the taxes, the burden of their share falls on those who are honest and complaint." 121) The respondents have also claimed that linking of Aadhaar with PAN is consistent with India's international obligations and goals. In this behalf, it is pointed out that India has signed the Inter-Governmental Agreement (IGA) with the USA on July 9, 2015, for Improving International Tax Compliance and implementing the Foreign Account Tax Compliance Act (FATCA). India has also signed a multilateral agreement on June 3, 2015, to automatically exchange information based on Article 6 of the Convention on Mutual Administrative Assi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... connected with the issue of duplicate/fake PANs. 123) At this juncture, we will also like to quote the following passages from the nine Judge Bench judgment of this Court in Jindal Stainless Ltd. (Footnote 40 above), which discussion though is in different context, will have some relevance to the issue at hand as well: "109. It was next argued on behalf of the dealers that an unreasonably high rate of tax could by itself constitute a restriction offensive to Article 301 of the Constitution. This was according to learned counsel for the dealers acknowledged even in the minority judgment delivered by Sinha, CJ in Atiabari's case (supra). If that be so, the only way such a restriction could meet the constitutional requirements would be through the medium of the proviso to Article 304(b) of the Constitution. There is, in our opinion, no merit in that contention either and we say so for two precise reasons. Firstly, because taxes whether high or low do not constitute restrictions on the freedom of trade and commerce. We have held so in the previous paragraphs of the judgment based on our textual understanding of the provisions of Part XIII which is matched by the contextual inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h it is applicable to the utmost extent to which the government may choose to carry it. The only security against the abuse of this power is found in the structure of the government itself. In imposing a tax, the legislature acts upon its constituents. This is, in general, a sufficient security against erroneous and oppressive taxation. 44. The people of a State, therefore, give to their government a right of taxing themselves and their property; and as the exigencies of the government cannot be limited, they prescribe no limits to the exercise of this right, resting confidently on the interest of the legislator, and on the influence of the constituents over their representative, to guard them against its abuse." 112. To the same effect is the decision of this Court in State of Madras v. N.K. Nataraja Mudaliar (AIR 1969 SC 147) where this Court recognized that political and economic forces would operate against the levy of an unduly high rate of tax. The Court said: "16.... Again, in a democratic constitution political forces would operate against the levy of an unduly high rate of tax. The rate of tax on sales of a commodity may not ordinarily be based on arbitrary considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. 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. Since we are adopting this course of action, in the interregnum, it would be permissible for the Parliament to consider as to whether there is a need to tone down the effect of the said proviso by limiting the consequences. 126) However, at the same time, we find that proviso to Section 139AA(2) cannot be read retrospectively. If failure to intimate the Aadhaar number renders PAN void ab initio with the deeming provision that the PAN allotted would be invalid as if the person had not applied for allotment of PAN would have rippling effect of unsettling settled rights of the parties. It has the effect of undoing all the acts done by a person on the basis of such a PAN. It may have even the effect of incurring other penal consequences under the Act for earlier period on the ground that there was no PAN registration by a particular assessee. The rights which are already accrued to a person in law cannot be taken away. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are assuaged by taking proper measures so that confidence is instilled among the public at large that there is no chance of unauthorised leakage of data whether it is done by tightening the operations of the contractors who are given the job of enrollment, they being private persons or by prescribing severe penalties to those who are found guilty of leaking the details, is the outlook of the Government. However, 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. 128) Subject to the aforesaid, these writ petitions are disposed of in the following manner: (i) We hold that the Parliament was fully competent to enact Section 139AA of the Act and its authority to make this law was not diluted by the orders of this Court. (ii) 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. (iii) Section 139AA of the Act is not discriminatory nor it offends equality clause enshrined in Article 14 of the Constitution. (iv) Section 139AA is also not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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