Neha Vs Union of India & Ors. (Delhi High Court)
No Face, No GSTIN—Delhi HC Directs Biometric Aadhaar Authentication for Every GST Registration Across India
Summary: The Delhi High Court has issued a significant nationwide interim direction that no fresh GST registration shall be granted without biometric-based Aadhaar authentication. The direction arose from petitions alleging that fraudsters had obtained GST registrations using stolen PAN & Aadhaar particulars of innocent citizens and thereafter conducted huge transactions, leaving the genuine identity holders exposed to tax demands, investigation & harassment. The Court noted that although the Government had publicly stated that biometric Aadhaar authentication had been made mandatory, the material placed before it indicated that such authentication was being carried out only in cases classified by the system as “risky”. Finding no practical difficulty demonstrated by the authorities in making it universal, the Court directed compulsory biometric authentication for all GST registrations until further consideration.
Identity Stolen, GST Liability Delivered
The petitions highlighted cases where GST registrations were allegedly obtained by unknown persons by misusing the PAN & Aadhaar particulars of innocent individuals.
The victims claimed that they had no connection with the businesses registered in their names. Nevertheless, large transactions & corresponding GST liabilities came to be reflected against their identities.
While examining the matter on 21.08.2026, the High Court observed that this was not an isolated complaint. It appeared that fraudulent GST registrations were being obtained on a large scale in the names of unsuspecting citizens, followed by creation of substantial tax liabilities.
Considering the seriousness of the issue, the Court requested Senior Advocate Tarun Gulati, who ordinarily represented assessees, to assist as amicus curiae & suggest measures to curb the misuse of PAN & Aadhaar details.
Fraud Running Into Thousands of Crores
The respondents placed written submissions & a status report of the Delhi Police before the Court.
An answer given by the Minister of State for Finance in the Rajya Sabha disclosed the scale of the problem. During FY 2023-24, 2,800 fraudulent GST registrations obtained using stolen or misused PAN/Aadhaar details were detected, involving tax evasion of approximately ₹15,085 crore.
During FY 2024-25, another 1,654 fraudulent registrations were detected, involving tax evasion of approximately ₹13,109 crore.
The Court observed that nearly nine years had elapsed since the CGST Act, 2017 came into force. Yet, the authorities had failed to effectively curb the malpractice. Fake registrations harmed innocent citizens who had no connection with the registered businesses & simultaneously caused enormous loss of revenue to the Government. ([TaxGuru][1])
Authentication Limited to “Risky” Cases
The authorities submitted that biometric-based Aadhaar authentication was undertaken where the registration application was identified as risky through prescribed parameters & data analytics.
The Court noted that the Government had stated before Parliament that biometric Aadhaar authentication had been made mandatory for GST registration. However, more than a year later, that assurance did not appear to have been fully implemented.
The continued use of stolen or misused identity particulars to obtain GST registrations indicated that the existing risk-based mechanism was inadequate.
During the hearing, counsel for the respondents were unable to point out any specific technical, administrative or legal difficulty in making biometric Aadhaar authentication compulsory for all applicants.
Nationwide Interim Direction
The High Court observed that the authorities must “rise to the situation”, considering both the loss of public revenue & the harassment caused to innocent persons.
It therefore directed all authorities across India not to permit any GST registration without biometric-based Aadhaar authentication henceforth.
The direction is interim in nature. The authorities were granted liberty to file objections explaining any practical difficulty in implementing universal biometric authentication.
The matter was directed to be listed for further consideration on 22.09.2026.
Additional Safeguards Suggested
The suggestions placed before the Court proposed a wider robust verification mechanism rather than dependence upon Aadhaar OTP alone.
These included facial recognition by matching the applicant’s live image with the Aadhaar database & a video-based verification requiring the applicant to display the original PAN and Aadhaar cards while reading a system-generated prompt or unique code.
It was also suggested that the GST portal preserve the IP address & device location used for submitting the registration application. Such information would assist in identifying the actual person responsible where the PAN holder later disputes having filed the application.
Another proposal contemplated physical verification of the principal place of business before registration, or alternatively, random periodic inspections selected through a risk-evaluation system.
Real-time information sharing with the Income-tax Department was suggested so that the PAN holder receives an immediate SMS & email whenever the PAN is used for obtaining a GSTIN. Similar alerts could be sent through DigiLocker, coupled with consent confirmation from the Aadhaar holder.
The suggestions also contemplated system-generated risk flags for sudden & substantial increases in turnover, first-time use of PAN/Aadhaar for GST registration & mismatch between the PAN holder and Aadhaar-linked applicant.
Court’s Concern Over Administrative Response
In an earlier hearing, the Commissioner of Delhi Police had deputed an officer to assist the Court. While appreciating the seriousness shown by the deputation, the Court expressed concern that the officer was unaware of the underlying problem when questioned.
The Court had granted the Commissioner, CGST, Commissioner, DGST & Commissioner of Delhi Police a final opportunity to formulate an effective solution, cautioning that it would otherwise pass appropriate directions.
Since the subsequent response did not disclose any difficulty in implementing universal biometric authentication, the Court considered immediate interim intervention necessary.
Author’s Comments
The order addresses a serious weakness in the GST registration architecture. OTP-based Aadhaar authentication proves access to a mobile number; it does not always establish that the genuine PAN/Aadhaar holder knowingly applied for the registration.
Universal biometric verification may increase the compliance burden & require adequate facilities for applicants, particularly in remote areas. Those practical issues remain open because the Court has expressly permitted the authorities to file objections.
Importantly, this is an interim order & not the final disposal of the petitions. Nevertheless, unless modified, the operative direction applies nationwide: no GST registration can be granted without biometric-based Aadhaar authentication.
In short, when a GSTIN can create crores of tax liability, the portal must verify the person behind the PAN—not merely the OTP reaching a phone.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. On 01.09.2026, the following Order was passed:
CM APPL. 56533/2026 in W.P.(C) 12210/2026 (exemption)
1. Allowed subject to all just exceptions.
Accordingly, the application is disposed of.
W.P.(C) 6218/2026 & W.P.(C) 12210/2026
2. On 21.08.2026, the following order was passed :
“1. This is the second case where the Petitioner alleges fraudulent GST registration by some other person by using the PAN Card and Aadhar Card numbers of the Petitioner. One such case, viz, W.P.(C) 6218/2026 came up for hearing on 20.08.2026 and it has been adjourned to 01.09.2026.
2. If the allegations of the Petitioner are to be accepted, there are rampant fraudulent GST Registration(s) in the name of innocent persons and pursuant to which huge liability is created thereafter.
3. Keeping the gravity of the situation in view, Mr. Tarun Gulati, learned Sr. Counsel, who normally represents assessees before this court is requested to assist the Court. The request of the Court has been accepted. He has assured to file a note ‘suggesting ways and means to curb such practices’.
4. Notice be issued to the Commissioner of Delhi Police. Learned Counsel Ms. Radhika Bishwajit Dubey, who is present in the Court, accepts notice on behalf of Respondent No. 5 i.e.Commissioner of Delhi Police.
5. List on 01.09.2026 in the Supplementary List.”
3. In compliance with the aforesaid order, Mr. Tarun Gulati, learned Senior Counsel, has placed on record certain suggestions, apart from the instructions issued by the concerned authorities from time to time, for curbing the misuse of PAN Card and Aadhaar Card particulars of innocent persons for obtaining fraudulent GST registrations. The suggestions placed before the Court read as under:
SUGGESTED WAYS AND MEANS
i. In compliance with the order dated 2108 2026 passed by this Hon’ble Court, the following ways and means may be considered to curb the practices of misuse of the PAN Card and Aadhaar Card of innocent persons to obtain fraudulent GST During the registration process, facial recognition of the applicant with the Aadhaar database should be made mandatory for all registrations
ii. A video-based verification of the PAN and Aadhaar should be made mandatory by requiring the applicant to upload a 20-30 seconds video in which he/she shows his/her face along with the original PAN card and Aadhaar card before the camera. holding cach document for a minimum of 5 seconds. Further, the applicant should the required to read aloud a system-generated prompt containing his her name or other relevant details, along with a unique code generated by the common portal similar to the process followed for DSC registration by e-Mudhra.
iii. The IP address and device location used at the time of filing the application should he recented and preserved by the GST cooumon portal as well as the jurisdictional authority sanctioning the application and granting GST registration, so that such data will be readily available for reference in the event a dispute subsequently arises as to the identity of the person who filed the application.
iv Mandatory physical verification of the proposed principal place of business should se undertakut by the GST Department prior to the grant of registration, rather than sich verification being confined to cases flagged as high-risk by the existing risk-unalytics engine. Or, in the alternative, random physical inspections of the principal place of business of randomly selected GST registrations should be undertaken by the GST Department on a bi-annual basis, based on a risk evaluation system.
v. Real time sharing of data with Income Tax Department which shall also in real sime send a message and email to the PAN holder that his/her PAN has been used for GST registration. A system should be developed to validate data and cross check it with the l’orm 26AS/Form 168 generated for the taxpayer.
vi. For a sudden and significant increase in turnover, the system should flag the registration under the potentially suspected category.
vii. Real-time cross check with the Aadhaar holder confirming that the applicant has actual knowledge of the business/ PPOB being registered under his Aadhaar.
viii. Sending of message to Digilocker [if available] informing that the PAN/Aadhaar number has been used for GST registration and obtaining consent-confirmation.
ix. Directorate General of Analytics and Risk Management (i.e., DGARM) can create a specific PAN-Aadhaar-mismatch and “first time use of PAN/Aadhaar for GST” risk parameter.
x. While applying for a GSTIN, the applicant may be required to nominate one or more identifiable persons such as business associates, employees, partners, or family members who can corroborate the applicant’s identity and the existence of the proposed business.
4. It is not disputed by learned counsel appearing for the Respondents that the problem of obtaining fraudulent GST registrations by using the PAN Card and Aadhaar Card numbers of innocent citizens has been rampant since the enforcement of the CGST Act, 2017. Nearly nine years have elapsed; however, the Respondents have failed to curb these malpractices, which not only affect citizens who have nothing to do with such GST registrations, but also result in huge loss to the Government. :contentReference[oaicite:1]{index=1}
5. Pursuant to the order passed on 21.08.2026, the Commissioner of Delhi Police has deputed Mr. Rajesh Kumar, SI, to assist the Court. While the deputation of an officer by the Commissioner of Delhi Police shows the seriousness on the part of the Delhi Police, it is a matter of concern that, when asked, the officer was not aware of the problem or the issue involved in these cases.
6. Keeping in view the aforesaid position, a last opportunity is granted to the Respondents, namely, the Commissioner, CGST, the Commissioner, DGST and the Commissioner of Delhi Police, 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.
7. List on 08.09.2026 in the Supplementary List.
2. Though no response has been uploaded. However, during the course of hearing, Written Submissions on behalf of Respondents No. 1, 2, 4 and Commissioner (Department of Trade and Taxes) along with a Status Report by Delhi Police has been produced.
3. As per the Written Submissions filed by the respondent No. 1, 2 and 4, biometric based AADHAR Authentication is carried out only if the system identifies the case as ‘risky’ on the basis of various parameters and data analytics.
4. Along with the affidavit Annexure G has been filed wherein the Minister of State in the Ministry Of Finance, while answering the question on fraudulent GST Registration has disclosed in the Rajya Sabha that in the year 2023-2024, there were 2800 fraudulent GST Registrations obtained by using stolen or frozen PAN/ AADHAR details involving detection of Rs.15,085 Crores of tax evasion.
5. In the year 2024-2025, the number of fraudulent GST Registrations were 1654 and tax evasion of Rs.13109 Crores was detected. It was disclosed that biometric AADHAR based authentication has been made mandatory for the GST Registration.
6. It appears that despite passage of more than one year, the statement given by the minister on the floor of the house has not been fully implemented, resulting in continuous fake GST Registration obtained using stolen or frozen PAN/ AADHAR details.
7. 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.
8. Learned counsel representing the respondents have failed to draw the attention of the court to any difficulty in mandating the biometric based AADHAR authentication of the GST Registration. 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. Liberty is granted to the authorities to file objections qua any practical difficulty in its implementation.
9. The authorities are also expected to examine the suggestions given by Sh. Tarun Gulati, learned Senior Counsel, which have been reproduced in paragraph 3 of the Order dated 01.09.2026 of this court.
10. List for further consideration on 22.09.2026 in the supplementary list.
11. A photocopy of the Order passed today be kept in the connected matter.
