BINOY VISWAM vs. UNION OF INDIA & ORS.

WRIT PETITION (CIVIL) No. 247/2017Supreme Court[2017] 7 S.C.R. 109 June 2017Bench: 2 JudgesAuthor: A.K. SIKRI, ASHOK BHUSHAN122 pages
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What did the Supreme Court hold?

The Supreme Court held that Parliament was fully competent to enact Section 139AA of the Income Tax Act, 1961. The Court found no conflict between the Aadhaar Act and Section 139AA, as they operate in distinct fields when interpreted harmoniously. Regarding Article 14, the Court held that Section 139AA is not discriminatory and does not offend the equality clause, as it treats all income tax assessees, who form a class, alike. The Court also held that Section 139AA does not violate Article 19(1)(g) as quoting the Aadhaar number does not, by itself, impinge upon the right to carry on profession or trade. However, the Court read down the proviso to Section 139AA(2) to operate only prospectively, to avoid unsettling settled rights and to prevent severe consequences for individuals whose PAN cards might be invalidated retrospectively. The Court explicitly stated that the validity of Section 139AA is upheld subject to the outcome of the proceedings before the Constitution Bench concerning Article 21 of the Constitution, particularly the Right to Privacy. A partial stay on the proviso to Section 139AA(2) was granted until the Constitution Bench decision.

What were the facts?

The Supreme Court was considering the constitutional validity of Section 139AA of the Income Tax Act, 1961, which mandates the quoting of Aadhaar or Aadhaar enrolment number for PAN applications and income tax returns. The petitioner challenged this provision, arguing that since Aadhaar enrolment is voluntary under the Aadhaar Act, it cannot be made compulsory under the Income Tax Act. The revenue contended that the provision is aimed at curbing black money, money laundering, and tax evasion, and de-duplicating PAN cards. The Court noted that the validity of the Aadhaar scheme itself, particularly concerning the Right to Privacy under Article 21, was pending before a Constitution Bench. The present judgment focused on the validity of Section 139AA concerning Articles 14 and 19 of the Constitution and the competence of Parliament.

What were the issues?

1. Whether Section 139AA of the Income Tax Act, 1961, making Aadhaar mandatory for PAN, is constitutionally valid, considering that Aadhaar enrolment is voluntary under the Aadhaar Act? (Question of law) 2. Whether Section 139AA of the Income Tax Act, 1961, violates Article 14 (equality before the law) of the Constitution? (Question of law) 3. Whether Section 139AA of the Income Tax Act, 1961, violates Article 19(1)(g) (right to practice any profession, or to carry on any occupation, trade or business) of the Constitution? (Question of law) Assessee's contentions: - Section 139AA is unconstitutional because it makes a voluntary scheme (Aadhaar) compulsory under the Income Tax Act. - The provision violates Article 14 as it creates unreasonable classification. - The provision violates Article 19(1)(g) by imposing restrictions on carrying on trade or business. Revenue's contentions: - Section 139AA is enacted to curb black money, money laundering, and tax evasion, and to de-duplicate PAN cards. - Parliament is competent to make provisions mandatory in one law even if they are directory in another. - The classification made by Section 139AA is reasonable and does not violate Article 14. - Quoting Aadhaar number does not impinge upon the right to carry on trade or business under Article 19(1)(g).

Which sections of the Income-tax Act were involved?

Section 139AA,Section 7

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[2017] 7 S.C.R. 1 BINOY VISWAM v. UNION OF INDIA & ORS. (Writ Petition (Civil) No. 247 of2017) JUNE 09, 2017 [A. K. SIKRI AND ASHOK BHUSHAN, JJ.) · Income Tax Act, 1961: s.139AA - Constitutionality of- s.139AA makes it compulsory A B for assessees to give aadhaar number - Constitutional validity of C s.139AA challenged on the ground that since enrolment under Aadhaar Act is voluntary, it canno1 be made compulsory under the · Income Tax Act - Held: The purpose for enrolment under the Aadhaar Act is to avail benefits of various welfare schemes etc. as stipulated in. s. 7 of.th.e Aadhaar Act - The purpose behind Income D Tax Act, on the other hand, is entirely different - For achieving the purpose such as curbing black money, money laundering and tax evasion etc., if the Parliament chooses to make the provision mandatory under the Income Tax Act, the competence of the Parliament cannot be questioned on the ground that it is impermissible only because under Aadhaar Act, the provision is directory in nature - It is the prerogative of the Parliament to make E a particular provision directory in one statute and mandatory/ compulsory in other - That by itself can

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