Centre Failed To Curb Fraudulent GST Registrations Using Innocent Citizens' PAN and Aadhaar: Delhi High Court

The Delhi High Court has observed that the Central government has failed to curb the practice of obtaining fraudulent GST registrations by misusing the PAN and Aadhaar details of innocent citizens, despite nearly nine years having elapsed since the enforcement of the Central Goods and Services Tax (CGST) Act, 2017.

The Division Bench of Justices Anil Kshetarpal and Shail Jain made the observation while considering petitions alleging fraudulent GST registrations obtained using the PAN and Aadhaar numbers of persons who had no connection with the businesses concerned.

The court noted that this was the second case before it where a Petitioner had alleged that another person had fraudulently obtained GST registration using her PAN and Aadhaar details.

In its earlier order dated August 21, the Court had observed that if the allegations were accepted, there appeared to be “rampant” fraudulent GST registrations in the names of innocent persons, resulting in huge liabilities being created against them.

The Court had consequently sought assistance from senior advocate Tarun Gulati on measures to curb such practices.

Pursuant to that direction, Gulati placed before the Court various suggestions, including making facial recognition of applicants with the Aadhaar database mandatory during GST registration.

Another suggestion was to introduce video-based verification, requiring applicants to upload a 20–30 second video showing their face along with their original PAN and Aadhaar cards and reading out a system-generated prompt containing their details and a unique code.

The suggestions also included recording and preserving the IP address and device location used while applying for GST registration, mandatory physical verification of the proposed principal place of business before registration, or alternatively random physical inspections of GST registrations on a bi-annual basis.

Other proposed measures included real-time sharing of data with the Income Tax Department, sending an alert to the PAN holder whenever their PAN was used for GST registration, flagging sudden and significant increases in turnover, and real-time confirmation from Aadhaar holders regarding the business and principal place of business being registered using their Aadhaar.

It was further suggested that the Directorate General of Analytics and Risk Management (DGARM) could create specific risk parameters for PAN-Aadhaar mismatches and the first-time use of PAN or Aadhaar for GST registration.

The Court noted that it was not disputed by the authorities that fraudulent GST registrations using the PAN and Aadhaar details of innocent citizens had been a rampant problem since the enforcement of the CGST Act, 2017.

“Nearly nine years have elapsed; however, the Respondents have failed to curb these malpractices,” the Court observed.

It added that the practice not only affects citizens who have nothing to do with such GST registrations but also results in huge losses to the Government.

The Court also noted that pursuant to its earlier order, the Commissioner of Delhi Police had deputed a Sub-Inspector to assist the Court. However, the Court expressed concern that the officer, when asked, was not aware of the problem or issue involved in the cases.

In view of the situation, the Court granted the Commissioner of CGST, Commissioner of DGST and Commissioner of Delhi Police a last opportunity to find an effective solution to the problem.

“Failing this, this Court shall be left with no choice but to pass appropriate and effective orders in the matter,” the Court said.

The matters have been listed for further hearing on September 8, 2026.

For Petitioner: Mr. Manoj Kumar, Mr. Ankit Singh, Mr. Vaibhav Bhardwaj and Ms. Satya Shruti Advs.

For Respondents: Ms. Radhika Arora, CGSC along with Ms. Disha Choudhary, GP for R-1&5. Mr. Ankit Raj, Standing Counsel for PNB and Mr. Digvijay Singh, Advs. for R-6. Mr. Shubham Tyagi, SSC, CBIC with, Ms. Navruti Ojha and Mr. Raman Goyal, Advs.