Fino Payments Bank MD Rishi Gupta moves Telangana HC challenging GST arrest in tax evasion probe
The High Court for the State of Telangana on Tuesday heard a writ petition challenging the arrest and detention of Rishi Gupta, Managing Director and CEO of Fino Payments Bank, in connection with an alleged online betting-linked GST evasion case.
The matter came up before a division bench comprising Justice A. Krishna Reddy and Justice G.M.M. on March 3, 2026. Senior Advocate Abhishek Manu Singhvi, appearing for the petitioners via video conferencing, questioned the legality of Gupta’s detention by Central Goods and Services Tax (CGST) authorities. The plea challenges the “Intimation of Arrest” dated February 27, 2026, and his subsequent remand before the Special Judge for Economic Offences at Nampally, Hyderabad.
Appearing for the Union government, Additional Solicitor General B. Narasimha Sharma represented Respondent No.1, while Additional Solicitor General N. Venkataraman appeared for Respondent No.2 — the Central Board of Indirect Taxes and Customs. The Centre contested the petition and sought time to file relevant materials. The court granted time until March 5, 2026, and listed the matter for further hearing on March 6.
Rs.3,000 Crore Suspected Routing Under Scanner
The arrest stems from a probe by the Directorate General of GST Intelligence (DGGI), Hyderabad unit, which is investigating alleged GST evasion linked to online betting applications.
According to investigators, nearly Rs.3,000 crore linked to betting app transactions is suspected to have been routed through banking channels. The broader betting network under scrutiny is estimated to involve transactions of approximately Rs.13,000 crore.
Officials are examining whether funds generated through betting apps were moved through a network of entities, including certain digital solution firms. The probe also centres on allegations that dummy merchants were onboarded to facilitate gaming services without invoices, allegedly resulting in GST evasion exceeding Rs.30 crore.
Authorities are probing the role of intermediaries and payment gateways in processing these transactions and whether due diligence norms were adequately followed.
Crucial Timing for Fino
The development comes at a critical juncture for Mumbai-headquartered Fino Payments Bank. In December, the bank had received in-principle approval from the Reserve Bank of India to convert into a small finance bank.
The proposed transition would allow the lender to accept term deposits without the earlier Rs.2 lakh cap on savings accounts — a key limitation for payments banks — and to build a full-fledged lending franchise, including MSME and mortgage loans.
Industry observers note that regulatory scrutiny at this stage could weigh on the bank’s transition plans, given the enhanced compliance expectations associated with small finance bank operations.
The case adds to heightened enforcement activity around online gaming and betting platforms, an area that has seen intensified tax scrutiny over classification, invoicing practices and GST liabilities.
With the High Court now seized of the matter, the legal battle could test the procedural safeguards surrounding arrests under GST law, particularly in cases involving large financial flows and digital intermediaries.
The next hearing on March 6 is expected to provide greater clarity once the Centre places its material on record.
