Delhi HC orders Aadhaar biometric verification for GST registration across India: Here's why

The Delhi High Court has directed national authorities to ensure that no GST registration is granted without Aadhaar biometric verification, pointing out the continued use of stolen or frozen PAN and Aadhaar data to obtain fraudulent GST registrations.

A Division Bench comprising Justice Anil Khetarpal and Justice Shail Jain stressed that the authorities should approach the matter “with all seriousness”, noting that such fraudulent registrations have resulted in loss of revenue to the government while causing hardship and harassment to innocent individuals.

At the same time, the court allowed authorities to raise concerns about any practical problems they may face in implementing the directive.

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The bench also asked the authorities to consider the recommendations made by senior advocate Tarun Gulati aimed at preventing misuse of PAN and Aadhaar data to secure fraudulent GST registrations.

The directions were passed in petitions, including one filed by Neha alleging fraudulent GST registration by another person using her PAN and Aadhaar details.

The court expressed concern over “rampant” fraudulent GST registrations

The court had earlier noted that this was the second such case and expressed concern over the possibility of “rampant” fraudulent GST registrations in the names of innocent persons, followed by creation of huge tax liabilities.

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The bench had earlier given a last chance to the Commissioner, CGST, Commissioner, DGST and Delhi Police Commissioner to find an effective solution to the problem and warned that failing that, it would have no option but to issue “appropriate and effective orders”.

During the proceedings, the Court was informed that Aadhaar biometric verification was done only when the system identified the application as “risky” based on parameters and data analysis.

The Bench also took cognizance of the figures released by the Secretary of State in the Finance Ministry in the Rajya Sabha. According to information released, 2,800 fraudulent GST registrations involving stolen or frozen PAN/Aadhaar details were detected in 2023-24, including ₹15,085 crore in exposed tax evasion. In 2024–25, 1,654 fraudulent registrations were detected, incl ₹Tax evasion in the amount of 13,109 million crowns.

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The Court observed that despite the declaration that Aadhaar-based biometric authentication was mandatory for GST registration, the measure did not appear to be fully implemented even after more than a year, leading to continued fake registrations using stolen or frozen PAN/Aadhaar data.

The Bench observed that the counsel appearing for the respondents was unable to identify any hurdle to make Aadhaar biometric authentication mandatory for GST registration.

With this in mind, the Court ordered that the measure be implemented across the country, allowing the authorities to raise any operational or practical issues.

The proposals before the Court include mandatory facial recognition in the Aadhaar database, conducting video verification of PAN and Aadhaar details, and storing IP addresses and device location information used during the enrollment process. They also require physical verification of the proposed principal place of business, real-time information sharing with the Income Tax department and notification to PAN holders whenever their details are used to apply for GST registration.

Other recommendations include monitoring sudden or substantial spikes in reported turnover, obtaining real-time confirmation from Aadhaar holders about a registered business, sending alerts through DigiLocker, developing risk indicators for PAN-Aadhaar mismatches and the first use of such details, and requiring applicants to identify persons who can verify their identity and confirm the existence of the proposed business.

The matter will next be presented to the court on September 22, 2026 in the supplementary list.