Telangana High Court reserves order on Fino Bank MD arrest in GST case
New Delhi, Mar 11, 2026
Telangana High Court reserves verdict on plea by Fino Payments Bank MD Rishi Gupta challenging his arrest in an alleged ₹10,000 crore GST evasion case linked to merchant transactions
The Telangana High Court on Wednesday reserved its judgment on a writ petition filed by Rishi Gupta, chief executive officer and managing director of Fino Payments Bank Ltd, challenging his arrest in connection with an alleged goods and services tax (GST) evasion scheme involving merchant entities using the bank’s payment aggregation platform. The court will pronounce its judgment on March 17.
The case centres on accusations of large-scale tax evasion, where merchants reportedly processed transactions worth approximately ₹10,000 crore without issuing invoices, in violation of the GST Act. Senior advocate Abhishek Manu Singhvi, representing the petitioner, argued that Gupta had no direct involvement in the alleged evasion. He emphasised that Fino operates solely as a payment aggregator and banking platform, providing infrastructure for transactions without liability for the tax compliance of sellers or buyers.
Singhvi contended that there were no personal allegations of GST default against the petitioner, with claims limited to certain suppliers using the platform. He highlighted that the bank adhered to Reserve Bank of India (RBI)-prescribed protocols for onboarding and de-boarding merchants, removing non-compliant entities. “The petitioner had no personal involvement in onboarding merchants, and therefore criminal liability cannot be attributed to him for alleged defaults of third-party sellers,” Singhvi submitted.
To demonstrate good faith, Singhvi noted that ₹28 crore in GST had already been paid. He also pointed out inconsistencies in enforcement, questioning why similar payment aggregators such as HDFC Bank Ltd and Razorpay Software had not faced scrutiny despite comparable models. He relied on the Bombay High Court’s decision in Mahesh Gada to distinguish intermediaries from principal tax defaulters.
Opposing the plea, Additional Solicitor General (ASG) N Venkataraman, appearing for the revenue authorities, defended the arrest, citing preliminary investigations uncovering multiple GST violations, primarily the non-issuance of invoices. He described the matter as a “serious economic offence” involving a vast tax evasion network. Venkataraman said due process was followed, including the issuance of summons and authorisation for arrest by the additional director general/commissioner.
The ASG highlighted transaction data analysis revealing the scale of evasion and urged the court to extend custodial interrogation while dismissing the bail petition. When queried by the bench about the seizure list and panchnama, he confirmed they were on record. The court also noted prior summons for details on 177 entities, which went unheeded as the concerned vice president failed to appear.
In rejoinder, Singhvi disputed claims of non-cooperation, producing evidence of undelivered summons through emails from GST officers. He invoked the Supreme Court’s Pankaj Bansal ruling to stress strict compliance with arrest grounds and procedural safeguards in economic offence cases.
After extensive arguments, the bench directed fresh summons to the vice president and reserved its order for March 17, 2026, on the writ challenging the arrest.
Legal experts said the case raises broader questions about accountability in India’s rapidly expanding digital payments ecosystem.
Ikesh Nagpal, lead – indirect tax at AKM Global, said the High Court’s examination of the arrest touches on an evolving legal issue in the fintech sector. “The Telangana High Court’s decision to closely examine the legality of the arrest raises an important and evolving question in the era of digital payments. It brings into focus how far liability can travel in platform-based transactions,” Nagpal said.
He added that as fintech and payment aggregation models continue to expand, the arrest of a bank’s managing director over merchant actions challenges the foundation of the intermediary business model.
“The law must clearly distinguish between entities that merely facilitate transactions and those that are directly responsible for the underlying taxable supplies,” he said.
[The Business Standard]
