In a significant legal development, the Delhi High Court has pulled up the Central Government and tax authorities over their failure to curb systemic GST registration fraud. Despite nearly nine years having elapsed since the implementation of the Central Goods and Services Tax (CGST) Act in 2017, fraudsters continue to misuse the PAN and Aadhaar details of innocent citizens to obtain fake GST registrations, creating huge liabilities against people who have no connection to the businesses concerned.
"Nearly nine years have elapsed; however, the Respondents have failed to curb these malpractices... The practice not only affects citizens who have nothing to do with such GST registrations but also results in huge losses to the Government."
— Division Bench of Justices Anil Kshetarpal and Shail Jain
Background of the Case
The Division Bench was hearing petitions filed by individuals who discovered that fake GST registrations had been obtained in their names using their PAN and Aadhaar details, without their knowledge or consent. As a result, these innocent individuals — with no connection to any commercial activity — faced the risk of huge liabilities being created against them.
This was the second such petition of its kind before the Bench. The Court noted that it was not disputed by the authorities that fraudulent GST registrations using innocent citizens' PAN and Aadhaar details have been a rampant problem since the CGST Act came into force in 2017. The Court also recorded its concern that a Sub-Inspector deputed by the Commissioner of Delhi Police to assist the proceedings was, when asked, not aware of the issue involved in the case — pointing to gaps in how seriously the problem is being treated on the ground.
Measures Suggested to the High Court
In its earlier order dated August 21, the Court had sought assistance from Senior Advocate Tarun Gulati on measures to curb these malpractices. Pursuant to that direction, Gulati placed the following suggestions before the Court:
- Mandatory Facial Recognition: Facial recognition of applicants matched against the Aadhaar database during GST registration.
- Video-Based Verification: Applicants to upload a 20–30 second video showing their face along with their original PAN and Aadhaar cards, reading out a system-generated prompt containing their details and a unique code.
- Location and Device Tracking: Recording and preserving the IP address and device location used while applying for GST registration.
- Physical Verification: 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.
- Real-Time Alerts and Data Sharing: Alerts sent to PAN/Aadhaar holders whenever their details are used for a GST application, real-time sharing of data with the Income Tax Department, and risk flags for PAN-Aadhaar mismatches or sudden turnover spikes.
- Real-Time Aadhaar Confirmation: Real-time confirmation sought from Aadhaar holders regarding the business and principal place of business being registered using their Aadhaar.
- DGARM Risk Parameters: A suggestion that the Directorate General of Analytics and Risk Management (DGARM) create specific risk parameters for PAN-Aadhaar mismatches and first-time use of a PAN or Aadhaar for GST registration.
The Delhi High Court has granted a final opportunity to the Commissioner of CGST, Commissioner of DGST, and the Commissioner of Delhi Police to find an effective solution to the problem. The Court warned that failing this, it "shall be left with no choice but to pass appropriate and effective orders in the matter." The matter is listed for further hearing on September 8, 2026.
The sections below are general practical guidance from efiletax's editorial team, not part of the Court's order or the case record. Procedures on government portals can change, so please verify current steps directly on the relevant portal before relying on them.
How to Check if Your PAN or Aadhaar Has Been Misused for GST Registration
gst.gov.in), use the "Search Taxpayer > Search by PAN" option to see all GSTINs registered against your PAN across India.
What to Do If You Find Fraudulent GST Registration in Your Name
- Raise a grievance on the GST Portal's grievance redressal facility, flagging the GSTIN and explaining you have no connection to it.
- File a complaint with your local Cyber Crime Cell or via the national cybercrime portal (
cybercrime.gov.in). - Write to your jurisdictional CGST/state GST officer with supporting documents (ID proof, an affidavit) disclaiming any connection with the fraudulent entity.
- Consult a tax professional or advocate promptly, especially if you have already received a demand or recovery notice, so you can respond within statutory timelines.