TaxTMI 
TaxTMI 
2026 (3) TMI 1679
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....r. N. Bhujanga Rao, learned Deputy Solicitor General of India appears for respondent No. 1. Mr. N. Venkataraman, learned Additional Solicitor General of India (ASGI), representing Mr. M.P. Kashyap, learned Senior Standing Counsel for Central Board of Indirect Taxes and Customs (CBIC) appears for respondent No. 2. 2. The present writ petition seeks a declaration that the action of arrest of petitioner No. 1 by the respondent authorities in File No. DGGI/INT/INTL/11/2026-GR J is arbitrary, illegal, highhanded and violative of Articles 14, 19, 21 and 22(2) of the Constitution of India; a declaration that the remand order dated 01.03.2026 passed by the learned Special Judge for Trial of Economic Offences Cases, Hyderabad is illegal and consequentially release petitioner No. 1 on bail in connection with the said case. 3. As per the averments made in the writ petition, the petitioner No. 1 is the founding member of M/s. Fino Payments Bank Limited. He was appointed as Chief Operating Officer (COO) and Chief Financial Officer (CFO) of M/s. Fino Pay Tech Limited, holding company. The petitioner No. 1 claims to be in the banking industry for three decades. Currently he is heading Fi....
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....rved at 6:00 am. The respondents' team left the premises of M/s. Fino Payments Bank with petitioner No. 1 at around 6:45 am on 27.02.2026 and thereafter he was brought to the GST Commissioner Office at Ballard Pier, Mumbai, whereafter he was produced before the learned Additional Chief Judicial Magistrate, Esplanade Court, Mumbai at 8:30 pm for transit remand. Thereafter, petitioner No. 1 was produced before the learned Special Judge for Trial of Cases under Economic Offences, Hyderabad on 01.03.2026 and was remanded to judicial custody. The petitioner No. 1 had sought a declaration that his arrest and remand is illegal and violative of his fundamental rights. 5. Learned Senior Counsel for the petitioners has inter alia asserted that the petitioner No. 1 is the CEO of M/s. Fino Payments Bank, which is a 'Bank As a Payment Aggregator' (BAPA) having 126 branches. It has 20.5 lakh merchants including HDFC, ICICI etc. The petitioner company has undertaken all the KYC requirements. The petitioner No. 1 has been arrested on the ground that he has not cooperated with the investigation. He has masterminded the transactions with shell entities thereby defrauded the Goods and Services Tax....
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....o provide information and to appear before the Senior Intelligence Officer, Hyderabad Zonal Unit on 17.02.2026, at 12.30 pm. However, said data was not submitted. The summons was again issued on petitioner No. 1 on 18.02.2026 on his official email address. Further email was sent on 23.02.2026 to the authorised signatory amongst others to provide information and to appear in person on 25.02.2026. Since the petitioner No. 1 was not cooperating, authorisation for search was issued on 26.02.2026 in Form GST INS-01 under Section 67(2) of the CGST Act by the Additional Commissioner/Additional Director on the business/residential premises of petitioner No. 1. On the same day, i.e., 26.02.2026, summons was issued upon the petitioner No. 1 to appear before the Senior Intelligence Officer at 6.30 pm on the same day. However, the answer given by the petitioner No. 1 was evasive. Learned ASGI submits that the team of DGGI, therefore, conducted a search on the premises of the company which ended at 3:45 hours in the early morning on 27.02.2026. The statements given by the petitioner No. 1 were evasive. Since he was not cooperating with the investigation, and the evidence gathered during inve....
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....custodial interrogation. It is further submitted that thereafter summons have been issued on top three officials of M/s. Fino Payments Bank to appear before the DGGI so that their statements can be taken to confront the petitioner No. 1 during custodial interrogation. However, they have refused to appear. It is further submitted that as per the data collected by the DGGI, transactions of about Rs. 10,000 crores have been found to be conducted without proper invoices. If the rate of tax on such transactions is computed, the amount of tax evasion discovered would come to about Rs. 2,800 crores. He has specifically referred to Section 14A of the CGST Act, as per which the petitioner would be treated as service provider for all the persons whose location is outside India. Learned ASGI has referred to the judgment of the apex court in V. Senthil Balaji vs. the State, rep. by Deputy Director Criminal Appeal Nos.2284-2285 of 2023, dated 07.08.2023 where case of economic offences has been excluded under Section 35(3) of the BNSS, 2023. It is submitted that the competent authority has recorded sufficient grounds to arrest petitioner No. 1 based on cogent reasons which cannot be found fau....
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.... early morning of 27.02.2026, the petitioner No. 1 has been produced for obtaining transit permit within the period of 24 hours as per the provisions contained under Article 22(2) of the Constitution of India. Therefore, the writ petition may be dismissed. 9. We have considered the submissions of learned counsel for the parties and taken note of the materials placed on record. We have also perused the decisions relied upon by them. 10. The narration of dates and events as borne out from the pleadings on record indicates that the matter pertains to evasion of GST by M/s. Fino Payments Bank, of which the petitioner No. 1 is the CEO. The company provides BAPA services. The evidence gathered during investigation pointed out to identification of an organized syndicate involved in operating illegal online gaming websites with the assistance of associated fintech companies, including payment bank/aggregator, payment gateway and third party technology service providers. A letter, dated 19.01.2026 was issued to the authorised signatory of the M/s. Fino Payments Bank to provide data/details/documents pertaining to the entities, namely M/s. Oceanique Web Solutions Private Limited and M/....
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....over the grounds of arrest to the petitioner No. 1. The arrest memo shows the arrest at 5.50 am. The panchanama prepared upon the search also shows that it concluded at 3.45 hours in the early morning of 27.02.2026. Therefore, it is clear that after conclusion of the search at 3.45 hours in the early hours of 27.02.2026 and recording of the statement of the petitioner No. 1 till about 3.48 am on 27.02.2026, the petitioner was put on arrest at 5.50 am on 27.02.2026. The intimation of arrest was also sent to the petitioner No. 2, who is the wife of petitioner No. 1. The same has also been received by her on the same day. He was produced for medical examination at St. George Hospital and then J.J. Hospital, Mumbai. Thereafter, he was produced before the learned Additional Chief Judicial Magistrate, Esplanade, Mumbai at 8.30 pm for transit remand. Petitioner No. 1 also made the said statement at para 14 of the writ petition. However, it is contended on behalf of the petitioners that relying upon the judgment of Niranjan Singh (supra) that he was effectively in custody since around 12.39 pm on 26.02.2026. As per paragraph 9 of the writ petition, the officers of DGGI entered the office o....
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....f no help to the petitioner No. 1. Even as per the case of Hanumant Nazirkar (supra), including the period of medical examination at Mumbai, the petitioner No. 1 was produced before the learned Additional Chief Judicial Magistrate, Esplanade, Mumbai much before the expiry of 24 hours period. The arrest memo also shows that the petitioner No. 1 was arrested at 5.50 am on 27.02.2026. The petitioner No. 1 has also attested his signature on the arrest memo and receipt copy of it. 11. The authorisation of arrest dated 27.02.2026 shows that on the basis of evidence gathered during the investigation the company was found involved in operating illegal online gaming websites with the assistance of fintech companies including payment bank/aggregator, payment gateway and third party technology service providers of whom the petitioner No. 1 is alleged to be the masterminded involved in the syndicate. An amount of Rs. 3,000 crores approximately is involved. The tax involved is Rs. 840 crores approximately. Therefore, the offence was committed by the petitioner No. 1 under Section 132(1)(a) and 132(1)(i) of the CGST/SGST Act, 2017, which is cognizable and non-bailable offence, punishable with....
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..../s. Oceanique Web Solutions Private Limited (in short 'M/s. Oceanique') and M/s. Webwin IT Hub Solutions Private Limited (in short 'M/s. Webwin'). - The entities M/s. Oceanique and M/s. Webwin were verified and found to be non-existent and a Panchanama in this regard has been drawn on 05.01.2026. Further, it was found that the said entities were involved in routing of funds by establishing platforms involved in providing taxable services (online money gaming) without issuance of invoices through the website/mobile apps 1. https://funinmatch360.com/ and 2. Racejett. - During inspection of M/s. Fino Payments Bank Limited dated 09.02.2026 they have provided details of program managers/resellers working with M/s. Fino Payments Bank Limited. Out of these, three resellers/program managers viz., M/s.PS Rao Digital Solutions (OPC) Private Limited, M/s. Billexpress Solutions Private Limited and M/s. Powerfin Technology Private Limited were found to be non operational/dummy entities established for routing of funds for online money gaming based on evidence obtained during proceedings. - These program managers/resellers have onboarded around 36 shell entities throug....
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....f M/s. Fino Payments Bank Limited in online gaming syndicate with involvement of top executive of the Bank i.e., CEO. - Evidence gathered during investigation pointed to identification of an organized syndicate involved in operating illegal online gaming websites with assistance of associated fintech companies including payment aggregator, payment gateway, third party service provider and technology service providers, wherein Shri Rishi Gupta is one of the masterminds involved in this syndicate of Rs.3,000 crores and the amount of tax involved is Rs. 840 crores approx (GST @28% on Rs.3000 crores approx). Accordingly the offence committed by Shri Rishi Gupta attracts the provisions of Section 132(1)(a) and 132(1)(i) of the CGST/SGST Act, 2017, which caused huge loss to the Government Exchequer which is a cognizable and non-bailable offence and the same is punishable with an imprisonment of a term that may extend upto 5 years and with fine, in terms of Section 132(5) of the said Act. 13. The grounds of arrest shows that there were sufficient materials collected during investigation showing petitioner No. 1 as one of the masterminds involved in the syndicate causing tax ev....