Aadhaar Authentication in GST Registration: Delhi High Court Seeks Stronger Verification Safeguards

One fine day, you decide to start your own business. After months of work and investment, you reach the final step: obtaining a GST registration. However, when you apply, you discover that a GST registration already exists in your name, created using your Aadhaar and PAN details. You never applied for it, yet your identity is now linked to a business you have nothing to do with. 

This question was encountered before the Delhi High Court in Neha Vs. Union of India & Ors.¹, The case was initiated on the allegation that someone had obtained a fraudulent GST registration using the Petitioner’s Aadhaar and PAN details. What started as an individual grievance became a question that challenged how GST registrations were verified. 

GST registration is generally the first step a business takes to enter the GST system. It creates a formal identity for the person or entity registered under the GST law. It was not the first instance that courts have faced similar issues. An earlier petition, Vikram Kaushal Vs. The Director General of Income Tax (Investigation) & Ors.², raised a congruent issue.

Genesis Of The Dispute

The Court concern developed from two separate petitions, both involving fraudulent GST registrations. On August 21, 2026, the Court, while hearing the matter, noted that the Petitioners alleged that others had used their Aadhaar and PAN details to obtain a fraudulent GST registration. The Courts added that if these allegations are correct, fraudulent registrations can be created in the names of innocent individuals, followed by liabilities against them. The Court did not see this as an issue that only affected these two Petitioners but as a nationwide problem. Mr Tarun Gulati, Senior Counsel, was requested to assist the Court in identifying ways to prevent the misuse of Aadhaar and PAN details for obtaining fraudulent GST registrations. The Commissioner of Delhi Police was also directed to be involved in the proceedings. 

These suggestions were primarily intended to answer this basic question in the registration process: How can the authorities verify that the person applying for GST registration is actually the one whose documents are being used?

Problem of Predication Only on Risk-based Verification 

The submissions made before the Court by the Respondents showed that Aadhaar-based biometric authentication was already used during GST registration. However, biometric authentication is only performed when the system identifies an application as “risky” based on parameters and data analytics.

In accordance with an affidavit placed before the Court, regarding information provided by the Ministry of Finance. For 2023-2024, there were almost 2,800 fraudulent GST registrations involving stolen or frozen Aadhaar and PAN details, resulting in tax evasion of Rs. 15,085 Crores. For 2024-2025, the number of fraudulent GST registrations amounted to 1654, with Rs. 13109 Crores of tax evasion. ³

The Court noted that biometric Aadhaar-based registration has been made mandatory for GST registration,⁴ but despite more than a year having passed, the measures remain unimplemented. The issue is not whether biometric authentication is in use. It was unclear under the existing system what triggers registration as risky, and whether this is a sufficient way to address the problem. 

Proposed Safeguards 

The suggestions placed before the Court by Mr Tarun Gulati, Senior Counsel, went beyond staying with biometric authentication. 

One proposal was to make facial recognition mandatory for every registration against the Aadhaar database. Another suggestion was to create a short video verification in which the applicant has to show their face, along with their original Aadhaar and PAN cards, and read a system-generated prompt containing their name and a unique code, followed by Digital Signature Certificate registration via e-Mudhra. 

A proposal to preserve IP address and device location while submitting the GST registration application. If, later on, there is a dispute regarding the identity of the person who submitted the application, relevant technical information will already be available with the GST authority. 

Mandatory physical verification was another idea that was greatly considered. The principal place of business could be physically verified before registration, rather than restricting such verification to high-risk flagged entities. An alternative was proposed: a random physical inspection based on the risk-based evaluation system.

The remaining suggestions were mostly focused on sharing real-time data with the Income Tax Department and on alerting the PAN holder when his/her PAN is used for GST registration. Real-time cross-check with the Aadhaar holder, confirming that the applicant has actual knowledge of the business. Sending a message to Digilocker [if available] informing that the PAN/Aadhaar number has been used for GST registration and obtaining consent confirmation. Lastly, 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.  

Taken together, these suggestions focus on verification at different stages of the registration process. Identity verification is only one part. The process should also establish the existence of the proposed business and preserve sufficient information to identify the applicant if questions arise later.

Court’s ruling

The Court observed that the Respondents did not dispute the fraudulent GST registration that used Aadhaar and PAN details of innocent citizens. However, it stated that the problem has persisted since the enforcement of the CGST Act, 2017, and, as a result, people with no connection to the registrations are being affected, ultimately resulting in a loss of Government revenue. 

On September 8, 2026, the Court observed that the Respondents had not faced any difficulty in mandating biometric Aadhaar authentication for GST registration. The Court directed authorities across the country not to allow any GST registrations without proper Aadhaar biometric authentication. The Court also gave liberty and asked for any objections or difficulties in implementing this direction. The Court also directed that the suggestions involving facial recognition, video verification, real-time information sharing, and additional risk assessment parameters be examined.

The Next Step 

The September 8 order issued directions and listed the matter for further consideration on September 22, 2026. On that date, the Court noted that an additional affidavit filed by the Respondent was not part of the paper book and that the additional affidavit filed by the Police Department was also subject to objections. The Respondent sought time to remove the objections and have the affidavits placed on record. The matter was accordingly listed for hearing on October 8, 2026. 

The central issue is clear, and the Delhi High Court has directed that biometric verification in GST registrations be shifted from a risk-based mechanism to a requirement. So, under the September 8, 2026, order, GST registrations across the country must follow the directive.

Citation

1. Neha v. Union of India & Ors., W.P.(C) 12210/2026 & W.P.(C) 6218/2026. ↩︎
2. Vikram Kaushal v. Director General of Income Tax (Investigation) & Ors., W.P.(C) 6218/2026.. ↩︎
3. Neha v. Union of India & Ors. and Vikram Kaushal v. Director General of Income Tax (Investigation) & Ors., W.P.(C) 12210/2026 and W.P.(C) 6218/2026, p. 6, para. 4-5. ↩︎
4. GST Council Secretariat, “Agenda for 49th GST Council Meeting,” Agenda Item 4(v), p. 148 (18 February 2023). ↩︎

Expositor(s): Adv. Stephin Sinu Oommen