A daily-wage potter in Uttar Pradesh’s Rae Bareli district has been served a Goods and Services Tax demand of Rs1.25 crore, triggering alarm over alleged identity misuse and gaps in compliance safeguards. Mohammad Saeed, who sells low-cost clay pots by the roadside near Harchandpur, says he has never operated a registered business and suspects his PAN and Aadhaar details were used to float a firm without his knowledge.The notice, delivered earlier this month, claims substantial tax liabilities linked to commercial transactions attributed to a business bearing his credentials. Saeed, who earns a modest income from seasonal sales of earthenware, told local officials he neither owns a company nor files GST returns. “I make pots and sell them in the weekly market. I do not know how to run a company,” he said, describing his shock at the scale of the demand.
District authorities have initiated a preliminary inquiry after Saeed approached the local GST office and police, alleging fraud. Officials indicated that cases of identity theft linked to shell firms have surfaced in several states, with fraudsters registering entities under unsuspecting individuals to generate fake invoices and claim input tax credits. Such rackets have drawn scrutiny from enforcement agencies over the past few years as the GST system, introduced in 2017 to unify indirect taxation, relies heavily on digital registrations tied to PAN and Aadhaar authentication.
Tax notice stuns Uttar Pradesh clay artisan
Under GST rules, businesses exceeding specified turnover thresholds must register and file periodic returns. The system’s online architecture is designed to reduce evasion and streamline compliance, yet tax experts acknowledge vulnerabilities when identity documents are compromised. In many reported cases, forged credentials or manipulated contact details enable bogus firms to operate for months before discrepancies surface.
Saeed’s case appears to follow that pattern. According to officials familiar with the matter, the registration linked to his PAN was created using a mobile number and email address not belonging to him. Transactions amounting to several crores were allegedly recorded, leading to accumulated tax dues. When returns went unfiled and liabilities mounted, automated notices were generated, culminating in the demand order.
Legal practitioners note that victims of such fraud often face an arduous process to clear their names. They must prove that the registration was obtained without consent and that they derived no benefit from the transactions. This can involve police complaints, affidavits and forensic checks of digital records. “The burden initially falls on the individual to demonstrate impersonation,” said a tax lawyer based in Lucknow, adding that authorities have become more responsive as similar complaints have emerged nationwide.
Government data over the past two years show intensified action against fake invoicing networks, with thousands of registrations suspended or cancelled. Enforcement drives have uncovered syndicates that create layers of fictitious firms to pass on fraudulent tax credits. Analysts argue that while the technology backbone of GST has improved transparency, periodic tightening of verification protocols remains essential to protect vulnerable citizens.
In Rae Bareli, local officials said they are coordinating with the GST department’s state unit to freeze the disputed registration and examine the trail of transactions. Police have registered a complaint under sections dealing with cheating and identity theft, and a cyber cell inquiry is under way. Officers are tracing the bank accounts linked to the purported firm and the IP addresses used for filings.
For Saeed, whose family depends on daily sales of earthen pots, the immediate concern is reputational damage and fear of coercive recovery measures. Revenue officials clarified that recovery proceedings would be held in abeyance while the investigation continues, provided prima facie evidence supports his claim of fraud. Community leaders have also petitioned district administrators to expedite relief, arguing that small artisans lack the means to navigate complex tax litigation.
Economists say the episode underscores the need for broader awareness about safeguarding personal data. Rural workers often share photocopies of identity documents for routine services, increasing exposure to misuse. Experts advocate stronger multi-factor authentication for tax registrations and real-time alerts to individuals when a GST number is issued against their PAN.