The bigger picture on the Aadhaar-PAN Judgment

There is intense debate on what to make of the Supreme Court’s decision in Binoy Viswam v. Union of India [Writ Petition (Civil) 247/2017], popularly referred to as the Aadhaar-PAN decision. Is this judgment, “pro” or “anti”Aadhaar? A clear understanding of the judgment requires a restatement of the history of this complex litigation. The judicial challenges to the Aadhaar scheme began before the Supreme Court with a clutch of petitions in 2012. The objections of the Petitioners could roughly be placed in three distinct buckets. First, privacy and autonomy, second exclusion and denial of benefits and finally national security. In August, 2015 on a submission by the Attorney General the Supreme Court referred all the Aadhaar cases to a constitution bench.

The reference was made on the basis of the right to privacy which is one of the main grounds of challenge being placed under doubt. This properly arose from a cloud on the existence and extent of the right to privacy under Article 21 of the Constitution of India. On its face Article 21 seems restrictive. Stretching into a single line that contains the right to life and liberty. But over time Article 21 has been a parent to several subsidiary rights. The Supreme Court has read in rights, including the right to privacy within Article 21 reasoning that the right to life, is a guarantee of human dignity beyond mere animal existence. In the Aadhaar cases it was argued by the Government that decisions of the Court that recognise the right to privacy under Article 21 did not adequately deal with conflicting, past decisions. To rid such an ostensible, technical inconsistency the entire Aadhaar batch of cases came to be referred to a constitution bench.

The reference to a constitutional bench meant that there would be at least 5 judges who would need to hear the case. Though the actual number of judges is disputed by some, what is not denied is the result. The reference of these petitions delays the eventual decision and the result till constitution bench is formed, sits and decides the Aadhaar cases. Such delay while incredibly regrettable is not unusual and may stretch into years, if not decades. This significant event has continued to define every subsequent litigation and hearing related to Aadhaar.

Before we proceed to analyze the decision some questions need to be answered. What happens till the formation of the constitution bench? Can the government force everyone to get a Aadhaar? Or, can it make it mandatory? These questions were answered to an extent the very day the Court referred the case to a constitution bench. It restricted the scope and extent of the use of Aadhaar to an express, limited set of government services such as cooking gas connections. Even for the provision of such services, Aadhaar was made voluntary. Voluntary in the plain English meaning, without the masquerade of inverted commas, not hiding coercion under the camouflage of legal jargon. This was to prevent exclusion and denial of benefits till the constitution bench is formed and finally hears the Aadhaar cases. However the implementation of these orders has been defeated by legal stratagems of the Government coupled with the inability of the Supreme Court to form a constitutional bench to finally decide the Aadhaar cases (read more here).

After about a year, the legal basis of the Aadhaar scheme was argued to have changed with the legislation of the Aadhaar Act, 2016 that was brought in without any public consultation further hammered through parliament as a money bill. With its legislation the government argued that the basis of restraints placed by the Supreme Court had changed. The Aadhaar scheme could be extended to all services, even made mandatory, all the way to heaven, all the way to hell. Petitions were filed afresh challenging provisions of the Aadhaar Act and the notifications under it. Given that many of these petitions raised objections on the basis of the right to privacy, they again came to be tagged with the preexisting cases awaiting the formation of a constitution bench. Clearly, there existed a judicial gridlock. It has been precisely 671 days since the reference. Meanwhile the Aadhaar project continues an inexorable creep being made mandatory for services such as mid day meal schemes and the PAN.

One of the most significant extensions of the Aadhaar scheme was it’s linking with the permanent account number or PAN. The PAN while necessary for paying income tax is also necessary for participation in India’s formal economy. By way of an amendment to the Income Tax Act a new provision number known as Section 139AA was added by the Finance Act, 2017. This provision had two parts that became operative from July 1, 2017. The first sub-section made it mandatory to quote Aadhaar for the application of a PAN card or the filing of the annual income tax return. The second sub-section stated that a person who has a PAN and can also get a Aadhaar shall intimate it in any manner as may be specified at a later date by the Government. A drastic penalty mandating the cancellation of PAN was contained for non-compliance with the second sub-section. Soon enough petitions came to be filed in the Supreme Court challenging Section 139AA of the Income Tax Act. To some surprise a division bench (the usual formation where two judges sit together) of the Supreme Court seemed amenable to hearing this case substantively, rather than tagging it by default with the pending references which await a constitution bench.

At the very threshold of the challenge, the Supreme Court records in the judgement a choice posed to the petitioners. It could either bunch this case with the pending Aadhaar case that awaits the formation of a constitution bench or proceed hearing the case without considering arguments on the right to privacy. Both options had their demerits and needed to be weighed carefully. The first would adjourn it to an indeterminate future date, while the latter would remove privacy as a ground of challenge making the case considerably weaker. In months following up to the Aadhaar-PAN case, several fresh challenges against the Aadhaar Act had been filed. These had availed of the first option, without little or no impact in slowing down the Aadhaar blitzkrieg. Independent of such petitions, lawyers for the Petitioners had on several occasions moved the Supreme Court by various means citing urgency for the formation of a constitution bench. This exercise was done repeatedly over a period of months. Sadly, there was little movement. In this prospect of little or no hope of being heard soon by a constitution bench, the Petitioners chose to argue the Aadhaar-PAN challenge without touching upon the right to privacy.

As arguments in the Aadhaar-PAN case progressed the public expectations with it buoyed due extensive media interest contributed by the live tweeting of the proceedings by lawyers who assisted counsels for the petitioners. Aadhaar was increasingly being viewed with suspicion by an ever expanding section of Indians and they were vocal about it, often prominently on social media. Many comments were premised on human dignity and individual autonomy. They voiced shock and outrage at a government in modern India asserting the maximum legal threshold over their bodies, in effect labelling them as vassals of the state. But many such arguments if cabined under a provision of the constitution would link to Article 21. Due to the pending constitutional bench reference, it was also unclear to what extent the right to privacy would link with arguments premised on bodily and informational autonomy. Again the judgement notes, that such arguments would need to be considered by a constitution bench which is yet to be constituted. This is not an incidental comment in the Aadhaar-PAN case but is repeatedly adverted and forms the substance of the decision.

Without reference to privacy or human dignity, the challenge to Section 139AA was a limited objection premised on Articles 14 and 19(1)(g) of the Constitution of India alongside doctrines of statutory inconsistency and legislative competence. It is pertinent to remember that without the aid of Article 21, these were subsidiary and weaker points of challenge. It is also relevant to consider that the scope of the challenge was limited to Section 139AA of the Income Tax Act, not to provisions Aadhaar Act or the scheme itself. Within this limited circle of judicial debate the Court rejects all such objections giving considerable liberty to the choice of the legislature. While I personally dislike such a result, the reasoning adopted by the court in parts and on it’s face does appear consistent with the quoted judicial precedent. What I agree with unequivocally with is the approach of the Court where at each such point of rejection it indicates a larger question that must be answered in the constitutional bench reference. For instance, whether Aadhaar, “should remain voluntary or it can be made mandatory imposing compulsiveness” ? These questions repeatedly draw boundaries to the extent of the constitutional examination of Section 139AA of the Income Tax Act in the Aadhaar-PAN case.

While death and taxes may be certain, a tax law is often beyond comprehension. Such confusion is present in the ultimate result of the Aadhaar-PAN decision. Even when rejecting all the points of challenge against Section 139AA, the Court provides a sliver of hope. It grants a stay against the cancellation of a PAN card under Section 139AA(2) to people who do not yet have a Aadhaar. There is a twin-folded reason expressly mentioned by the Court. The first is the severe extent of the penalty. The cancellation of PAN would literally be a, “civil death” as it would disqualify a person from day to day financial transactions that require it to be quoted. The second reason is much more significant. To quote the Supreme Court, “[t]he validity of the provision upheld in the aforesaid manner is subject to passing the muster of Article 21 of the Constitution, which is the issue before the Constitution Bench… Till then, there shall remain a partial stay on the operation of proviso to sub-section (2) of Section 139AA of the Act”.

The impact of this statutory recasting is still being debated by public law and direct tax experts given there are ambiguities which remain. For instance given there is no change to Section 139AA(1), whether an Aadhaar for filing of Income Tax returns is still mandatory? Was the stay only against the penalty for commercial transactions or even applies to filing tax returns? Also, what happens if one tries to file their returns without an Aadhaar ? Will such filing be rejected, marked in defects or accepted without the prescribed penalty of PAN cancellation? The judgement is not happily worded on these aspects and it does give rise to concern given the Government may adopt an interpretation which serves it best. A clarification from the Central Board of Direct Taxes issued yesterday seems to confirm such apprehension. Even for persons who do not have a Aadhaar, it is now necessary for them to obtain one if they wish to file their income tax returns after July 1, 2017. This again signals urgency for a final determination of the Aadhaar batch of cases.

A significant aspect which does require recognition is the treatment of the orders passed at the time reference which placed restraints on the number of schemes which could link to Aadhaar and made it’s use voluntary. Such orders have been stated in the Aadhaar-PAN judgement to have been displaced, reasoning that they cannot be used to injunct the legislature from making provisions such as Section 139AA. This aspect of the judgement requires wider examination given that challenges in several High Courts against other notifications draw strength from the such orders — — arguing that Aadhaar is resulting in exclusion and deprivation from basic services such as subsidies and rations. Such aspects only reinforce the seriousness of the main challenges to the Aadhaar Act, 2016 along with the constitutional reference. Till a constitutional bench is constituted the Supreme Court has another opportunity in another two weeks to pass interim restraints, as the Petitioners have asked the court in another case to limit the coercion and denial through Aadhaar Act itself (read more here). Till the constitution bench sits the legal opposition to Aadhaar cannot be properly adjudicated on the touchstones of our most cherished liberties of the right to life, privacy and human dignity. Hence, even this case needs to be approached with sobered expectations but continuing engagement and assertion of our fundamental rights.

In the end let us ask again, is this judgment, “pro” or “anti” Aadhaar? While some are disappointed with the immediate result, such criticism is much more properly directed at the failure of the Court to decide the constitutional reference. The judgement is a cause for cautious optimism when it states that Aadhaar and Section 139AA of the Income Tax Act have to pass a, “more stringent test” under Article 21. It reinforces the spirit of earlier orders which limited the Aadhaar scheme by giving a limited stay on Section 139AA(2) and preventing the cancellation of PAN. If the decision answers anything, it does so with criticism towards itself, indicating urgency and a hope for a more substantial challenge to the Aadhaar scheme. When Justice Sikri writing the Aadhaar-PAN judgment invokes Ronald Dworkin’s adage, “hard cases” it may not necessarily complete to, “hard cases make bad law”.

Disclosures : As a lawyer I have assisted senior counsel who appear for the petitioners in the Aadhaar cases. My personal view matches my professional representations in this instance. The Aadhaar project not only violates individual privacy but leads to denial of rations and subsidies to the most vulnerable section of Indians. An edited version of this article has been published by the wonderful team at Scroll and is available here.

Like what you read ? My previous writing on issues of civil liberties, technology and policy are available on this blog. A rough list of articles authored for external publications is also available here. Any comments can be sent by email to

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