# BINOY VISWAM v. UNION OF INDIA & ORS - **Citation:** [2017] 7 S.C.R. 1 - **Court:** Supreme Court of India - **Decided:** 2017-06-09 - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/binoy-viswam-v-union-of-india-ors-32049 - **Pages:** 122 ## Headnote [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 cannot be a ground to question the competence of the legislature - After all, Aadhaar Act is not a mother Act - Two laws, i.e., Aadhaar Act, on the one hand, and law in the form of s.139AA of the Act, on the other hand, are two different stand alone provisions/laws and validity of one cannot be examined in the light of provisions of other Acts - Thus, there is no conflict between the provisions of Aadhaar Act and s.139AA of Income Tax F Act in as much as when interpreted harmoniously they operate in distinct fields - Legislation - Interpretation of statutes - Harmonious 0 G construction - Aadhaar (Targeted Delivery of Financial and other Subsidies, Benefits and Services) Act. s.139AA - Purpose of- Held: s.139AA is aimed at seeding Aadhaar with PAN - One of the main objectives is to de-duplicate H 2 SUPREME COURT REPORTS [2017] 7 S.C.R. A PAN cards and to bring a situation where one person is not having more than one PAN card or a person is not able to get PAN cards in assumed/fictitious names - In such a scenario, if those persons who violate s. I 39AA of the Act without any consequence, the provision shall be rendered toothless - It is the prerogative of the Legislature B c to make penal provisions for violation of any law made by it - The requirement of giving Aadhaar enrolment number to the designated authority or stating this number in the income tax returns is directly connected with the issue of duplicate/fake PANs - Therefore, it cannot be denied that there has to be some provision stating the consequences for not complying with the requirements of s. l 39AA of the Act, more particularly when these requirements are found as not violative of Arts.14 and 19 - If Aadhar. number is not given, the said exercise may not be possible - Sub-section (1) of s. l 39AA stipulates that those who are not PAN holders, while applying for PAN, they are required to give Aadhaar number - At the same time, as far as existing PAN holders are concerned, since the impugned D provisions are yet to be considered on the touchstone of Art.21 of the Constitution, including on the debate around Right to Privacy and human dignity, etc. as limbs of Art.2I, till the said aspect of Art.2I is decided by the Constitution Bench a partial stay of the E F said proviso is necessary - Those who have already enrolled themselves under Aadhaar scheme would comply with the requirement of sub-section (2) of s.l 39AA of the Act - However, those assessees who are not Aadhaar card holders and do not comply with the provision of s.139(2), their PAN cards be not treated as invalid for the time being - A person wJio 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 o ## Text _Characters 0–39,875 of 286,012. This is a partial read: ask again with offset=39875 for what follows._ [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 cannot be a ground to question the competence of the legislature - After all, Aadhaar Act is not a mother Act - Two laws, i.e., Aadhaar Act, on the one hand, and law in the form of s.139AA of the Act, on the other hand, are two different stand alone provisions/laws and validity of one cannot be examined in the light of provisions of other Acts - Thus, there is no conflict between the provisions of Aadhaar Act and s.139AA of Income Tax F Act in as much as when interpreted harmoniously they operate in distinct fields - Legislation - Interpretation of statutes - Harmonious 0 G construction - Aadhaar (Targeted Delivery of Financial and other Subsidies, Benefits and Services) Act. s.139AA - Purpose of- Held: s.139AA is aimed at seeding Aadhaar with PAN - One of the main objectives is to de-duplicate H 2 SUPREME COURT REPORTS [2017] 7 S.C.R. A PAN cards and to bring a situation where one person is not having more than one PAN card or a person is not able to get PAN cards in assumed/fictitious names - In such a scenario, if those persons who violate s. I 39AA of the Act without any consequence, the provision shall be rendered toothless - It is the prerogative of the Legislature B c to make penal provisions for violation of any law made by it - The requirement of giving Aadhaar enrolment number to the designated authority or stating this number in the income tax returns is directly connected with the issue of duplicate/fake PANs - Therefore, it cannot be denied that there has to be some provision stating the consequences for not complying with the requirements of s. l 39AA of the Act, more particularly when these requirements are found as not violative of Arts.14 and 19 - If Aadhar. number is not given, the said exercise may not be possible - Sub-section (1) of s. l 39AA stipulates that those who are not PAN holders, while applying for PAN, they are required to give Aadhaar number - At the same time, as far as existing PAN holders are concerned, since the impugned D provisions are yet to be considered on the touchstone of Art.21 of the Constitution, including on the debate around Right to Privacy and human dignity, etc. as limbs of Art.2I, till the said aspect of Art.2I is decided by the Constitution Bench a partial stay of the E F said proviso is necessary - Those who have already enrolled themselves under Aadhaar scheme would comply with the requirement of sub-section (2) of s.l 39AA of the Act - However, those assessees who are not Aadhaar card holders and do not comply with the provision of s.139(2), their PAN cards be not treated as invalid for the time being - A person wJio 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 Art.21 of the Constitution - Since this course of action is adopted, 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 G proviso by limiting the consequences - However, at the same time, proviso to s. l 39AA(2) cannot be read retrospectively - Constitution of India - Art.21. H s.139AA(2) proviso - Retrospective effect - Constitutionality of- Held: If failure to intimate the Aadhaar number renders PAN BINOY VISWAM v. UNION OF INDIA & ORS. 3 void ab initio with the deeming provision that the PAN allotted would A 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 B 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 - Therefore, proviso to sub-section (2) has to be read down to mean that it would operate only prospective. Aadhaar (Targeted Delivery of Financial and other Subsidies, Benefits and Services) Act, 2016: Object of its enactment - Held: The Aadhaar Act is enacted to enable the Government to identify individuals for delivery of benefits, subsidies and services under various welfare schemes. Whether Aadhaar card scheme whereby biometric data of an individual is collected violates- Right to Privacy and, therefore, is offensive of Art.21 of the Constitution - Held: This issue is pending before the Constitution Bench and is yet to be decided - In the process, the Constitution Bench is also called upon to decide as to whether Right to Privacy is a part of Art. 21 of the Constitution at all - Final decision pending - Constitution of India - Art.21. Need to interconnect the databases - Linking PAN with Aadhaar/biometric information to prevent use of wrong PAN for high value transactions - Multiple methods of giving proofs of identity - There is no mechanism/system at present to collect the data available with each of the independent prooft of ID - Seeding of existing PAN with Aadhaar is perceived as the best method, and the only robust method for de-duplication of PAN database. Constitution of India: Art.14 - Reasonable classification -· Art.14 enshrines the principle of equality as a fundamental right - It gives the right to equal treatment in similar circumstances, both in privileges conferred and in the liabilities imposed - However, the guarantee against the denial of equal protection of the law does not mean that identically the same rules of law should be made applicable to all persons in c D E F G H 4 SUPREME COURT REPORTS [2017] 7 S.C.R. A spite of difference in circumstances or conditions - The varying needs of different classes or sections of people require differential and separate treatment - The Legislature is required to deal with diverse problems arising out of an infinite variety of human relations - The principle of equality of law, thus, means not that the same law B c D E F should apply to everyone but that a law should deal alike with all in one class; that there should be an equality of treatment under equal circumstances - Aadhaar (Targeted Delivery of Financial and other Subsidies, Benefits and Services) Act, 20 i 6. Art.i4 - Class legislation - it is permissible for the State to classify persons for 'legitimate purposes - The Legislature is also competent to exercise its discretion and make classification - s.i39AA of income Tax Act, i96i has created two classes, i.e. one class of those persons who are assessees and other class of those persons who are income tax assessees. - The impugned provision is applicable only to those who are filing income tax returns - There cannot be any dispute that there is a reasonable basis for dijferentiation and, therefore, equal protection clause enshrined in Art. i 4 is not attracted - What Art. i 4 prohibits is class legislation and not reasonable classification for the purpose of legislation - All income tax asessees constitute one class and they are treated alike by the impugned provision. Art. i 9(1 )(g) - Quoting the Aadhaar number for purposes mentioned in sub-section (1) of s.i 39AA of Income Tax Act, i96i or intimating the Aadhaar number to the prescribed authority as per the requirement of sub-section (2) does not, by itself, impinge upon the right to carry on profession or trade, etc. - Therefore, it is not violative of Art.i9(l)(g) of the Constitution. Art.i9(l)(g) - If the PAN of a person is withdrawv or is nullified, it definitely amounts to placing restrictions on the right to do' business. G Principle of separation of power - Each wing of the State to H act within the sphere delineated for it under the Constitution - 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 - Taxation. BINOY VISWAM v. UNION OF INDIA & ORS. 5 Judicial review; A Power of courts to interfere with legislative action - Scope of - Held; Courts can strike down legislation either on the basis that it falls foul of federal distribution of powers or that it contravenes fandamental rights or other Constitutional rights/provisions of the Constitution of India - No doubt, since the Supreme Court and the B High Courts are treated as the 'ultimate arbiter in all matters involving interpretation of the Constitution, it is the Courts which have 1he final say on questions relati'!g to rights ~nd its violation. c Stages ·of judicial review - Exercise of judicial review to be done at three stages - Jn the first stage, the Court would examine as to whether impugned provision in a legislation is compatible with the fandamental 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 D was not within the powers assigned in the list in VII Schedule, no farther enquiry is needed and such a law is to be declared as ultra vires the Constitution - However, while undertaking substantive judicial review, if it is found that the impugned provision appears to be violative of fundamental rights or other Constitutional rights, the Court reaches the second stage of review -:- At this second phase · of enquiry, the Court is supposed to undertake the. exercise as to w.hether the impugned provision can still be saved by reading it down so as to bring it in conformity with the Constitutional provisions · - If that is not achievable then the enquiry enters the third stage - If the offending portion of the statute is severable, it is severed and the Court strikes down the impugned provision declaring the same as unconstitutional - Administrative law. Disposing of the writ petitions, the Court HELD: 1. Scope of Judicial Review of Legislative Act Under the CO'nstitution; Supreme Court as well as High E F G Courts are vested with the power of judicial review of not. only administrative acts of the executive but legislative enactments passed by tJle legislature as well. This power is given to the High Courts under Article 226 of the_ Constitution .and to the H 6 SUPREME COURT REPORTS [2017] 7 S.C.R. A Supreme Court under Article 32 as well as Article 136 of the Constitution. At the same time, the parameters on which the power of judicial review of administrative act is to be undertaken are different from the parameters on which validity of legislative enactment is to be examined. No doubt, in exercise of its power B c of judicial review of legislative action, the Supreme Court, or for that matter, the High Courts can declare law passed by the Parliament or the State Legislature as invalid. However, the power to strike down primary legislation enacted by the Union or the State Legislatures is on limited grounds. Courts can strike down legislation either on the basis that it falls foul of federal distribution of powers or that it contravenes fundamental rights or other Constitutional rights/provisions of the Constitution of India. No doubt, since. the Supreme Court and the High Courts are treated as the 'ultimate arbiter in all matters involving interpretation of the Constitution, it is the Courts which have the final say on questions relating to rights and whether such a D right is violated or not. The basis of this 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 Ill', enshrining fundamental rights. It categorically states that E any law made in contravention thereof, to the extent of the contravention; be void. In the context of judicial review of legislation, Article 372 (1) 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. [Paras 73, 74][77-G-H; 78-A-D, G] F Union of India & Ors. v. Sicom Limited & Am: (2009) 2 SCC 121 : [2008) 17 SCR 120; Ashok Kumar Thakur v. Union of India & Ors. (200~) 6 SCC 1 : [2008) 4 SCR 1; State of A.P. & Ors. v. McDowell & Co. & Ors. (1996) 3 SCC 709 : [19961 3 SCR 721 - relied on. G United States Department of Justice v. Reporters Committee for Freedom of the Press 489 U.S. 749 (1989) - referred to. 1.2 A legislation cannot be declared unconstitutional on the ground that it is 'arbitrary' inasmuch as examining as to whether H a particular Act is arbitrary or not implies a value judgment and BINOY VISWAM v. UNION OF INDIA & ORS. 7 the courts do not examine the wisdom of legislative choices and, A therefore, cannot undertake this exercise. [Para 78] [84-A-B] Rajbala & Ors. v. State of Haryana & Ors. (2016) 2 SCC 445 : [2015] 12 SCR 1106; Jindal Stainless Ltd. & Anr. v. State of Haryana & Ors. (2016) 11 SCALE 1 - relied on. B 1.3 Afortiori, a law cannot be invalidated on the ground that the Legislature did not apply its mind or it was prompted by some improper motive. 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 c legislatures. However, while undertaking this ~xercise 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 D 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 in the list in VII Schedule, no further enquiry is needed and such a law is to be declared as ultravires the Constitution. However, while undertaking substantive judicial review, if it is found that the impugned provision appears to be violative of fundamental rights or other Constitutional rights, the Court reaches the second stage of review. At this second phase of enquiry, the Court is supposed to undertake the exercise as to whether the impugned provision can still be saved by reading it down so as to bring it in conformity with the Constitutional provisions. If that is not achievable then the enquiry enters the third stage. If the offending portion of the statute is severable, it is severed and the Court strikes down the impugned provision declaring the same as unconstitutional. [Paras 79, 80)(85-A-E] 2.1 Concept of 'Limited Government' and its impact on powers of Judicial Review Undoubtedly, the Constitution of India, as an instrument of governance of the State, delineates the functions and powers of E F G H 8 SUPREME COURT REPORTS .[2017] 7 S.C.R. A each wing of the State, namely, the Legislature, the Judiciary and the Executive. It also enshrines the principle of separation of powers which mandates that each wing of the ·state has to function within its own domain and no wing of the State is entitled to trample over the function assigned to the other wing of tlte State. This. D c fundamental document of governance also contains principle of federalism wherein the Union is assigned cer.taln powers and likewise powers of the State are also prescribed. In this context, the Union Legislature, i.e. the Parliament, as well a,s the State Legislatures are given specific areas in respect of which they have power to legislate. That is so stipulated in Schedule VII of the Constitution wherein List I enumerates the subjects over which Parliament has the dominion, List II spells out those areas where the State Legislatures have the power to make laws while List III is the Concurrent List which is accessible both to the Union as well as the State Governments. The Scheme pertaining to making laws by the Parliament as well as by the Legislatures D 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 E to power of taxation, undoubtedly, power to tax is treated as sovereign power of any State. [Para 82)(85-G-H; 86-A-DJ 2.2 In a democratic society governed by the Constitution, there is a strong tr~nd towards the Constitutionalisation of democratic politics, where the actions~or democratic elected F Government are judged in the light of the Constitution, In this . context, judiciary assumes the roie of protector of the Constitution and democracy, being the ultimate arbiter in all matters involving the interpretation of the Constitution. When it comes. to exercising the power of judicial review of a legislation, the scope of such a power has to be kept in mind and the power is to be G exercised within the limited sphere assigned to the judiciary to undertake the judicial review. Therefore, unless the petitioner demonstrates that the Parliament, in enacting the impugned provision, has exceeded its power prescribed in the Constitution or this provision violates any of the provision, the argument H BINOY VISWAM v. UNION OF INDIA & ORS. 9 predicated on 'limited governance' will not succeed. (Paras 84, A 85] [88-G-H; 89-A-CJ State of Madhya Pradesh & Anr. v. Thakur Bharat Singh AIR 1967 SC 1170 : [1967) 2 SCR 454 - relied on. 3.1 TheAadhaar Act is enacted to enable the Government to identify individuals for delivery of benefits, subsidies and B services under various welfare schemes. Section· 7 of the Aadhaar Act states that proof of Aadhaar number is necessary for receipt" of such subsidies, benefits and services. At the same time, it cannot be disputed that once a person enro)s himself and obtains Aadhaar number as mentioned in Section 3 of the Aadhaar Act, c such Aadhaar number can be used for many other purposes. In fact, this Aadhaar number becomes the Unique Identity (UID) of that person. Having said that, it is clear that there is no provision in Aadhaar Act which makes enrolment compulsory. May be for the purpose of obtaining benefits, proof of Aadhaar card is necessary as per Section 7 of the Act. Proviso to Section 7 D stipulates that if an Aadhaar number is not assigned to enable an individual, he shall be offered alternate and viable means of identification for delivery of the subsidy, benefit or service. According to the petitioners, this proviso, with acknowledges alternate and viable means of identification, and therefore makes Aadhaar optional and voluntary and the enrolment is not necessary even for the purpose of receiving subsidies, benefits and services under various schemes of the Government. The respondents, however, interpret the proviso differently and there plea is that E F the words 'if an Aadhaar number is not assigned to an individual' deal with only that situation where application for Aadhaar has been made but for certain reasons Aadhaar number has.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 G 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. However, for the' ·purposes of Income Tax Act, Section 139AA makes it compulsory for the assessees to give Aadhaar number which means insofar H 10 SUPREME COURT REPORTS [2017] 7 S.C.R. A as income tax assessees are concerned, they have to necessarily enroll themselves under the Aadhaar Act and obtain Aadhaar number which will be their identification number as that has become the requirement under the Income Tax Act. The contention that since enrollment under Aadhaar Act is voluntary, B c it cannot be compulsory under the Income Tax Act, cannot be countenanced.[Paras 90, 92][90-C-G; 91-C) Municipal Corporation of Delhi v. Shiv Shanker (1971) 1 SCC 442 : [1971] 3 SCR 607 - relied on. 3.2 A harmonious reading of the two enactments would clearly suggests that whereas enrollment of Aadhaar is voluntary when it comes to taking benefits of various welfare schemes even if it is presumed that requirement of Section 7 of Aadhaar Act that it is necessary to provide Aadhaar number to avail the benefits of schemes and services, it is upto a person to avail those benefits or not. On the other hand, purpose behind enacting Section D 139AA is to check a menace of black money as well as money laundering and also to widen the income tax net so as to cover those persons who are evading the payment of tax. There are few cases where interim orders are passed by Court where the E F G H Court was of the opinion that till the matter is dedded finally in the context of Right to Privacy issue, the implementation of the said Aadhaar scheme would remain voluntary. In fact, the main issue as to whether Aadhaar card scheme whereby biometric data of an individual is collected violates Right to Privacy and, therefore, is offensive of Article 21 of the Constitution or not is yet to be decided. In the process, the Constitution Bench is also called upon to decide as to whether Right to Privacy is a part of Article 21 of the Constitution at all. Therefore, no final decision has been taken.[Paras 93, 94][92-G-H; 93-C-D] Whether Section 139AA of the Act is discriminatory and offends Article 14 of the Constitution of India? . 4.1 Article 14 forbids class legislation; it does not forbid reasonable classification of persons, objects and transactions by the Legislature for the purpose of achieving specific ends. Classification to be reasonable should fulfil the following two tests: (1) It should not be arbitrary, artificial or evasive. It should be BINOY VISWAM v. UNION OF INDIA & ORS. 11 based on an intelligible differentia, some real and substantial A distinction, which distinguishes persons or things grouped together in the class from others left out of it. (2) The differentia adopted as the basis 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 B 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 C 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