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Says Centre Failed to Curb Fraudulent GST Registrations Using PAN, Aadhaar
The has expressed serious concern over the Centre's failure to curb the rampant practice of fraudulent GST registrations obtained by misusing the PAN and Aadhaar details of innocent citizens. A of Justice Anil Kshetarpal and Justice Shail Jain granted the authorities a final opportunity to find an effective solution, warning that failing this, the court would be left with no choice but to pass appropriate orders.
The court was hearing two petitions—one by Neha and another by Vikram Kaushal —who alleged that their PAN and Aadhaar details were used without their knowledge to obtain GST registrations. The court noted that this was the second such case before it, indicating a widespread problem. Since the enforcement of the Act in , fraudulent registrations have been rampant, causing huge losses to the government and burdening innocent citizens with tax liabilities.
Suggestions to Curb Misuse
Senior advocate , appointed as , placed before the court a series of technological and administrative measures to prevent such fraud. These included:
- Mandatory facial recognition of applicants against the Aadhaar database.
- Video-based verification requiring applicants to upload a 20–30 second video showing their face along with original PAN and Aadhaar cards, and reading out a system-generated prompt.
- Recording of IP addresses and device locations used during application.
- Mandatory physical verification of the proposed principal place of business before registration, or alternatively, random physical inspections on a bi-annual basis.
- Real-time data sharing with the , including alerts to PAN holders via DigiLocker.
- Specific risk parameters for PAN-Aadhaar mismatches and first-time use of PAN/Aadhaar for GST registration.
Court's Observations
The court observed that the respondents did not dispute the prevalence of fraudulent registrations.
"Nearly nine years have elapsed; however, the Respondents have failed to curb these malpractices, which not only affect citizens who have nothing to do with such GST registrations, but also result in huge loss to the Government,"
the bench remarked.
The court also expressed concern that a sub-inspector deputed by the to assist the court was unaware of the issue when asked.
Final Opportunity
The court granted a last opportunity to the Commissioner of , Commissioner of , and Commissioner of to devise an effective solution.
"Failing this, this Court shall be left with no choice but to pass appropriate and effective orders in the matter,"
the court said.
The matter has been listed for further hearing on .
