GST Registration Update: Businesses and individuals planning to register under the Goods and Services Tax (GST) regime should pay attention to a recent Delhi High Court order concerning Aadhaar authentication.
The Delhi High Court has directed authorities to ensure that GST registrations are not processed without biometric-based Aadhaar verification. The order came during the hearing of petitions concerning alleged fraudulent GST registrations created using the PAN and Aadhaar details of individuals without their knowledge.
A bench comprising Justice Anil Kshetarpal and Justice Shail Jain considered the issue and raised concerns over the continued misuse of personal identification details for obtaining fraudulent GST registrations.
Why Has the Delhi High Court Issued This Order?
During the proceedings, the court referred to figures previously presented by the government in Parliament regarding fake GST registrations and tax evasion.
According to the figures mentioned in the order, authorities detected around 2,800 cases of fraudulent GST registration during 2023-24, involving suspected tax evasion of approximately ₹15,085 crore.
For 2024-25, the court noted that 1,654 fraudulent registrations were identified, with tax evasion estimated at around ₹13,109 crore.
The court expressed concern that fraudulent registrations could continue when criminals misuse the PAN and Aadhaar details of unsuspecting citizens.
GST Registration to Require Biometric Aadhaar Verification
The court observed that the government had earlier indicated that biometric Aadhaar authentication would be made mandatory for GST registration. However, the required system had not yet been fully implemented.
In view of the concerns surrounding fake registrations, the court directed authorities to take steps to ensure that GST registrations are not allowed without biometric-based Aadhaar verification.
The court also emphasised the need for authorities to address the financial losses caused by fraudulent registrations and the inconvenience faced by innocent individuals whose identity documents may have been misused.
September 22 Hearing: Officials Can Raise Practical Concerns
The court has scheduled the matter for further consideration on September 22.
Authorities have been given an opportunity to inform the court about any practical or technical difficulties that could arise while implementing biometric Aadhaar verification for GST registration.
Any objections or concerns regarding implementation can be raised before the next hearing.
In an earlier proceeding, the court had also directed authorities not to dismiss concerns regarding fraudulent GST registrations allegedly created using the PAN and Aadhaar information of innocent citizens.
What Is the Current GST Registration Process?
Under the existing framework referred to in the proceedings, Aadhaar authentication is not universally mandatory for GST registration. Depending on the applicable process, GST applications can be submitted using PAN and other required documents.
The court’s latest direction seeks to strengthen the verification process by introducing biometric-based Aadhaar authentication as a safeguard against identity misuse.
If the direction is implemented as indicated, applicants seeking GST registration would need an Aadhaar number that can be authenticated, including through the mobile number linked with Aadhaar, as part of the verification process.
Court Raises Concerns Over Delay in Strengthening Verification
The Delhi High Court also pointed out that nearly nine years have passed since the introduction of GST, yet stronger biometric verification measures have not been implemented in the manner discussed before the court.
The court linked the delay with the continued risk of fraudulent registrations, potential revenue losses and difficulties faced by citizens whose personal identification details are misused.
GST Registration Update: What Applicants Should Know
The latest development highlights a possible major change in the way GST registration applications are verified.
For now, applicants and businesses should keep track of further directions from the Delhi High Court and the GST authorities, particularly ahead of the September 22 hearing.
The final implementation process, including how biometric Aadhaar authentication will be carried out and whether any practical exceptions will apply, will depend on subsequent directions and action by the authorities.