Delhi HC orders nationwide biometric Aadhaar verification for GST registrations

The court flagged growing misuse of stolen or frozen identity details to create fraudulent GST registrations, warning of tax losses and hardship for genuine individuals while seeking stronger verification safeguards.

The Delhi High Court has directed authorities to ensure that biometric Aadhaar authentication is carried out for GST registrations across the country, in a move aimed at curbing fraudulent registrations obtained using stolen or frozen PAN and Aadhaar details.

A Division Bench of Justice Anil Khetarpal and Justice Shail Jain said the issue needs to be addressed with “all seriousness”, noting that fake GST registrations not only cause revenue losses to the government but can also leave innocent individuals facing unwanted tax liabilities and harassment.

The direction came while hearing petitions, including a case filed by Neha, who alleged that another person had fraudulently obtained a GST registration using her PAN and Aadhaar information.

The Bench also permitted the authorities to bring any operational difficulties in implementing compulsory biometric verification to the court’s attention. It further asked them to examine recommendations submitted by Senior Advocate Tarun Gulati for preventing misuse of identity documents during GST registration.

Court flags scale of fraudulent GST registrations

The court had previously expressed concern over what it described as the possibility of “rampant” fraudulent GST registrations being created in the names of unsuspecting individuals. Such registrations, it observed, could subsequently result in substantial tax liabilities being attributed to people who were not involved in the underlying business activities.

During the proceedings, the court was informed that biometric Aadhaar authentication was currently triggered only for applications classified as “risky” through specified parameters and data analytics.

The Bench also considered figures presented by the Minister of State in the Ministry of Finance in the Rajya Sabha. Government data showed that 2,800 fraudulent GST registrations involving stolen or frozen PAN and Aadhaar details were identified during 2023-24, with detected tax evasion amounting to Rs 15,085 crore.

In 2024-25, authorities detected another 1,654 fraudulent registrations, involving tax evasion of Rs 13,109 crore.

The court noted that although biometric Aadhaar-based authentication had reportedly been made mandatory for GST registration, fraudulent registrations continued to surface more than a year later. It also observed that the respondents' counsel could not point to a specific obstacle preventing biometric authentication from being made compulsory.

Court seeks stronger safeguards against identity misuse

The recommendations before the court include mandatory facial recognition against the Aadhaar database, video-based verification of PAN and Aadhaar details, and preservation of IP addresses and device-location information associated with GST registration applications.

Other proposals include physical verification of the proposed principal place of business and real-time information sharing with the Income Tax Department. Another recommendation calls for PAN holders to be notified whenever their details are used to apply for a GST registration.

The proposed safeguards also include monitoring unusual increases in reported turnover, obtaining real-time confirmation from Aadhaar holders regarding the business for which their identity is being used, and sending relevant alerts through DigiLocker.

The recommendations further suggest developing risk indicators for PAN-Aadhaar mismatches and the first-time use of identity details for GST registration. Applicants could also be required to identify individuals who can independently verify their identity and confirm the existence of the proposed business.

The court has directed nationwide implementation of biometric Aadhaar authentication while allowing authorities to report any practical challenges. The matter is scheduled to come up again on September 22, 2026, in the supplementary list.