The Delhi High Court has directed authorities across the country to not allow any new GST registration without biometric-based Aadhaar authentication, citing the continued misuse of stolen or frozen PAN and Aadhaar details to obtain fraudulent registrations.
A division bench of Justice Anil Khetarpal and Justice Shail Jain issued the interim direction on September 8, after taking note of submissions by the tax authorities that biometric-based Aadhaar authentication was currently carried out only when the GST system identified an application as ‘risky’ based on various parameters and data analytics.
The court observed that the tax authorities have failed to draw its attention to any difficulty in mandating biometric-based Aadhaar authentication for GST registrations. The court directed, “Hence, for the time being, directions are issued to all the authorities across the country not to allow any GST Registration without biometric based AADHAR authentication henceforth”.
The tax authorities have been given liberty to file objections regarding any practical difficulty in implementing the direction.
The order assumes significance as the court noted a gap between the position stated by the government in Parliament and the manner in which authentication was being implemented on the ground. According to an annexure filed before the court, the Minister of State in the Ministry of Finance had told the Rajya Sabha that biometric Aadhaar-based authentication had been made mandatory for GST registration. However, tax authorities told the court that AADHAR authentication is carried out only if the system identifies the case as ‘risky’ on the basis of various parameters and data analytics.
The minister had also disclosed that 2,800 fraudulent GST registrations involving stolen or frozen PAN/Aadhaar details were detected in 2023-24, involving Rs 15,085 crore of tax evasion. In 2024-25, another 1,654 fraudulent registrations were detected, involving Rs 13,109 crore in tax evasion.
Together, the two years saw 4,454 fraudulent registrations and Rs 28,194 crore of detected tax evasion, according to the figures placed before the court.
The High Court observed that despite more than a year having passed since the minister’s statement, the measure had not been fully implemented, resulting in the continued obtaining of fake GST registrations using stolen or frozen PAN and Aadhaar details.
“At the first instance, this Court is compelled to request the competent authorities to rise to the situation, which is resulting in the loss of revenue to the government and harassment of innocents. The authorities are expected to take up the matter with all seriousness. ” the court said, noting that the problem was resulting in loss of government revenue as well as harassment of innocent citizens.
The court also directed the authorities to examine 10 suggestions submitted by senior advocate Tarun Gulati to curb fraudulent GST registrations. These include mandatory facial recognition, video-based verification of PAN and Aadhaar, preservation of IP address and device-location data, physical verification of business premises, real-time alerts to PAN holders and additional risk parameters for first-time use or PAN-Aadhaar mismatches.
An tax expert, a tax and consulting firm, said the court’s direction would make identity verification a central part of the GST registration process. “The Court’s direction effectively puts identity verification at the front and centre of GST registration, which is important when stolen or misused PAN and Aadhaar details can leave completely innocent persons facing the consequences of fraudulent registrations,” he said.
He said stronger technology-led checks could help detect suspicious registrations without creating unnecessary hurdles for genuine businesses.
“At the same time, the suggestions around real-time alerts, digital footprints and targeted verification can add meaningful layers of protection. The objective should be to strike the right balance by keeping the registration process frictionless for genuine businesses, but far less vulnerable to misuse of an innocent person’s PAN or Aadhaar,” he said.
The court has listed the matter for further consideration on September 22, 2026.
