The Delhi High Court has directed authorities across the country to make biometric-based Aadhaar authentication mandatory before granting any registration under the Goods and Services Tax (GST) regime, in a bid to curb fraudulent registrations obtained using stolen or frozen PAN and Aadhaar details.
A Division Bench of Justice Anil Kshetarpal and Justice Shail Jain passed the interim order on September 8 while hearing petitions highlighting instances where unsuspecting citizens’ identity documents were allegedly misused to obtain fake GST registrations and facilitate financial fraud.
The Court ordered an immediate nationwide freeze on new GST registrations without biometric-based authentication. The Bench, however, permitted the government to apprise it of any practical difficulties that may arise in implementing the direction.
The petitions included one filed by a woman, Neha, who alleged that two GST registrations had been fraudulently obtained using her PAN and Aadhaar details without her knowledge or consent. According to her plea, the registrations were allegedly used in an attempt to swindle more than Rs 4.46 crore from her savings account with Punjab National Bank.
Neha stated that the bank subsequently informed her that it had received a purported GST notice concerning the amount in favour of a GST authority. She lodged complaints before the concerned GST authorities in March 2026, but allegedly received no effective response, prompting her to approach the High Court.
During an earlier hearing, the Court had expressed concern over the scale of fraudulent GST registrations and observed that the GST regime appeared to have created “more problems than it solved”. The authorities were thereafter granted a last opportunity to come up with an effective solution.
At the September 8 hearing, the Bench referred to data disclosed by a Union Minister of State for Finance in the Rajya Sabha. The data showed that 2,800 fraudulent GST registrations were detected during 2023-24, involving stolen or frozen PAN or Aadhaar details and resulting in approximately Rs 15,085 crore in tax evasion.
For 2024-25, 1,654 such fraudulent GST registrations were detected, involving tax evasion of around Rs 13,109 crore.
The government had informed Parliament that biometric-based Aadhaar authentication was being introduced as a mandatory measure to combat such fraud. However, the High Court noted that the measure had not been implemented comprehensively.
The Court observed that despite more than a year passing, the minister’s parliamentary statement remains unfulfilled, allowing fraudulent GST registrations using stolen or frozen PAN and Aadhaar details to persist.
The Bench noted that fraudulent registrations not only cause revenue loss to the government but also result in harassment of innocent citizens whose identity documents are misused.
The GST authorities and the Centre submitted that biometric Aadhaar verification was presently conducted only where the GST system categorised an application as “risky” based on specified parameters and data analytics. The High Court, however, directed that biometric-based Aadhaar authentication be undertaken in every case where GST registration is sought, rather than limiting the requirement to applications flagged as risky.
The Court cautioned authorities to handle the matter with utmost seriousness.
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