Petition Seeks Judicial Intervention: GST Registration Model Alleged to Enable Massive Tax Frauds
(By Syed Ali Taher Abedi)
In a significant legal development, a Public Interest Litigation (PIL) has been filed invoking the Court’s extraordinary writ jurisdiction under Article 32 of the Constitution of India.
The Petitioner has urged judicial intervention into what is described as a serious systemic flaw in the grant of Goods and Services Tax (GST) registrations, a matter that, according to the plea, impacts not only the petitioner personally but millions of law-abiding citizens across the country.
The petition underscores that GST, introduced through the Central Goods and Services Tax Act, 2017, was hailed as a landmark reform designed to usher in transparency, uniformity, and efficiency in the indirect tax regime.
Marketed as a historic shift, GST was intended to simplify compliance, widen the tax base, and curb revenue leakages.
However, the plea asserts that the very process of granting GST registrations has become the breeding ground for widespread fraud, enabling unscrupulous entities to orchestrate scams amounting to thousands of crores.
Such unchecked practices, it is argued, have gravely undermined the credibility of the tax system and eroded public confidence in what was meant to be a model reform of the fiscal framework.
It is a matter of record that the Goods and Services Tax (GST) has emerged as the predominant source of indirect tax revenue for both the Union and State Governments, having contributed in excess of ₹20 lakh crores since its inception.
Monthly collections consistently exceed ₹1.5 lakh crores, underscoring the fiscal centrality of the regime. With over 1.5 crore registered taxpayers, the registration mechanism constitutes the structural spine of the GST framework.
However, the integrity of this foundational process stands compromised. The petitioner submits that the registration protocol is marred by systemic vulnerabilities, wherein Aadhaar numbers and PAN credentials of unsuspecting individuals are routinely stolen, leaked, or forged.
These compromised identities are then misused to incorporate shell entities, thereby facilitating large-scale tax evasion and undermining the rule of law. Such practices not only erode public trust but also pose a grave threat to the constitutional promise of economic justice.
That further, on 09.03.2021, the Ministry of Finance, in a reply to the Rajya Sabha, placed on record that financial scams amounting to Rs. 20,124 crores had been unearthed during the brief period between 09.11.2020 and 31.01.2021, spanning scarcely three months. Subsequently, on 06.12.2023, the Government, in a disclosure before Parliament, admitted to the detection of 21,791 fraudulent registrations, leading to the unearthing of tax evasion exceeding Rs. 24,000 crores.
The petitioner submits that “That the Petitioner has no personal interest in the matter and is filing the present Petition purely in public interest in order to safeguard the rights of millions of citizens and bona fide taxpayers whose Aadhaar and PAN details are being misused for obtaining fraudulent GST registrations, resulting in tax evasion running into thousands of crores of rupees, besides serious infringement of their right to privacy, reputation, dignity, and economic security guaranteed under Articles 14, 19 and 21 of the Constitution of India”
The escalating scale and sophistication of GST-related frauds reveal a troubling inadequacy in existing administrative and technological safeguards.
In the absence of timely judicial intervention, these systemic lapses are likely to persist, posing a serious threat to the constitutional rights of citizens and undermining the integrity of India’s indirect tax architecture.
The petitioner contends that only the judiciary can restore accountability and reinforce the rule of law within the GST framework.
“That the absence of a dedicated data protection law further fuels the situation, as sensitive personal details like Aadhaar, PAN, and even specimen signatures linked with the GST database are vulnerable to leaks and misuse. Notably, with the advancement of technology and AI tools, fraudsters are finding new ways to exploit these gaps, making the issue even more pressing. The present Petition, therefore, seeks judicial intervention to ensure that the process of GST registration is safeguarded through proper checks, verification, and accountability, so as to prevent fraud at its inception rather than leaving citizens to bear the consequences afterward”
The petitioner Rudra Vikram Singh is a practicing lawyer at Supreme Court and the petition is file and settled by Advocates Ashirwad Kumar Yadav, Anirudh Tiyagi and Manju Sharma Jetley
