The Supreme Court on Wednesday said it could not stop Parliament from passing a law to link PAN with Aadhaar to check tax evasion.

Describing tax evasion as ‘shameful,’ it said it could also not bar the use of Aadhaar to prevent leakage of welfare subsidies.

“We are a kind of society where we want to evade taxes. We are not a tax-compliant society,” a bench comprising Justice A K Sikri and Justice Ahok Bhushan said.

The court was hearing a batch of public interest cases challenging the constitutionality of Section 139AA inserted in the Income Tax Act by the Finance Act of 2017.

The new provisions make Aadhaar mandatory for citizens to hold a Permanent Account Number (PAN) and file income tax returns.

Senior advocate Arvind Datar, appearing for former Kerala minister and CPI leader Binoy Viswam, contended that the Aadhaar Act made no mention of black money or fake and fraudulent PANs.

“Why would they mention black money in the Aadhaar Act, which seeks to give benefits to people who are hand-to-mouth?” the bench said.

The court, however, indicated it might examine the constitutional validity of the new provisions if they were found violative of fundamental rights.

Datar contended making Aadhaar mandatory would contravene the apex court’s earlier orders.
Attorney General Mukul Rohatgi, however, interjected that the orders were passed when the government had not enacted and notified the Aadhaar Act.

Introduction of the law had changed their legal status, he argued.

The bench agreed. “We have not passed any judgement in those cases. They are only interim orders... The interim arrangement was made when there was no law. Now, Parliament has enacted a law,” it said.

The court said it could not preclude Parliament from making laws.

Under the new provisions, Datar submitted, a citizen’s PAN would be rendered invalid if not linked to Aadhaar by July 1. It would also be presumed that the citizen had never applied for PAN.

Rohatgi in turn said the provision would not be enforced retrospectively.

He said 99% of India’s population was enrolled under the Unique Identification Authority of India, and held Aadhaar cards now.

Senior advocate Shyam Divan, appearing for (Retired) Maj Gen S G Vombatkere and social activist Bezwada Wilson, said Aadhaar could lead to the complete destruction of political and individual freedom. Divan will continue his arguments on Thursday.