The Delhi High Court has, as an interim measure, directed authorities across the country not to allow new GST registrations without biometric-based Aadhaar authentication. The direction is aimed at preventing fraudulent registrations created using the PAN and Aadhaar details of unsuspecting individuals.
The court was hearing petitions alleging that GST registrations had been obtained using the petitioners' PAN and Aadhaar details without their knowledge.
The direction will remain subject to further proceedings, with the matter listed for hearing on September 22.
The immediate impact is likely to be on businesses and applicants seeking fresh GST registration, as biometric Aadhaar authentication becomes a requirement under the court's interim direction.
The court noted that the government had earlier stated that Aadhaar-based biometric authentication would be made mandatory for GST registration, but observed that the measure had not been implemented.
The court also referred to government data showing 2,800 fraudulent GST registrations involving tax evasion of ?15,085 crore in 2023-24, followed by 1,654 such registrations involving ?13,109 crore in 2024-25.
For genuine businesses, the direction could add an additional verification step to the GST registration process, while potentially reducing the risk of registrations being created using stolen or misused identity details.
Ikesh Nagpal, Lead-Indirect Tax at AKM Global, said the interim direction is significant because it addresses the gap between the stated policy of mandatory biometric Aadhaar authentication and its implementation.
“The Court's direction effectively puts identity verification at the front and centre of GST registration,” Nagpal said, adding that stolen or misused PAN and Aadhaar details can leave innocent individuals facing the consequences of fraudulent registrations.
He said measures such as real-time alerts, digital footprints and targeted verification could provide additional safeguards. At the same time, the objective should be to ensure that the registration process remains relatively frictionless for genuine businesses while making it harder to misuse an individual's PAN or Aadhaar details.
The court has given authorities the liberty to raise objections over any practical difficulties in implementing the direction. This means the September 22 hearing will be important in determining how the requirement evolves.
For individuals, the case also highlights a broader risk: misuse of PAN and Aadhaar details can have consequences beyond identity theft, including fraudulent tax registrations linked to their credentials. The court had earlier observed that such fraudulent GST registrations had affected citizens who had no connection with the businesses involved.
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