Delhi High Court protects identity theft victim in ₹78-Crore GST Case

New Delhi [India], September 2 (ANI): The Delhi High Court has stepped in to protect a businessman who fell victim to identity theft and was wrongly saddled with a tax demand of nearly ₹79 crore.
The case underscores the risks of systemic loopholes in digital governance and highlights the need for stronger safeguards in GST migration procedures.
The petition was filed by Aakash Gupta, sole proprietor of M/s Amit Aakash Enterprises, which was initially registered under the Delhi VAT regime in 2015.
Gupta discontinued his business in 2017, formally applied for the cancellation of his VAT registration, and closed his bank account in August of that year.
However, three years later, in 2020, officials from the Directorate General of GST Intelligence (DGGI) approached him, alleging that his VAT registration had been fraudulently migrated into the GST system and used to generate fake Input Tax Credit (ITC).
Gupta immediately filed a police complaint alleging misuse of his Aadhaar, PAN, mobile number, and email ID. He specifically flagged that a different mobile number and email ID had been linked with the fraudulent GST registration. Despite his complaints, no FIR was registered, and no probe into the suspicious credentials was initiated.
Meanwhile, the GST authorities issued a show-cause notice in February 2023, which eventually led to a demand of ₹78.93 crore, along with equivalent penalties, in February 2025. Gupta challenged this before the High Court, pointing out that he had ceased business long before GST was introduced, had not applied for GST registration, and was a victim of identity theft.
Representing Gupta, Senior Advocate Sunil Dalal, along with a team of lawyers, argued that the proceedings were baseless as there was no evidence linking Gupta to the alleged fraudulent ITC.
Adv Dalal stressed that the authorities had ignored vital facts--such as the closure of Gupta's business and bank account in 2017--and failed to investigate the alternate mobile number and email associated with the fraud.
The Division Bench of Justice Prathiba M. Singh and Justice Shail Jain noted that the matter raised serious questions about how the VAT-to-GST transition occurred. The Court directed the GST Department to produce records showing what documents were filed for migration, whether any OTP was ever sent to Gupta's registered mobile number, and whether Form GST REG-26 was filed.
The Court also ordered the police to file a status report on the investigation into identity theft.
Importantly, the Bench restrained the GST authorities from taking any coercive action against Gupta pursuant to the impugned order, thereby providing immediate relief to the petitioner. The matter will now be further considered in November 2025 after counter-affidavits and investigation reports are filed. (ANI)