GST Arrest Upheld by Telangana High Court — Restriction of Movement During Search Does Not Amount to Arrest Under CGST Act

Case Reference

Rishi Nand Kishore Gupta Vs Union of India
Court: Telangana High Court
**Writ Petition No.😗* 6657 of 2026

Background and Context

The Telangana High Court recently delivered a significant ruling concerning the validity of an arrest made under the Central Goods and Services Tax Act, 2017, in a matter involving alleged large-scale GST evasion through an organized online gaming syndicate. The Court dismissed the writ petition filed by the petitioner challenging his arrest, transit remand, and subsequent judicial remand, holding that all procedural requirements were duly complied with and no fundamental rights were infringed.

The case raises crucial questions about what constitutes "arrest" under GST law, whether physical presence during a search operation can be equated with custody, and whether the constitutional safeguard enshrined under Article 22(2) of the Constitution of India was violated in this instance.

Parties and Their Roles

The petitioner, Rishi Nand Kishore Gupta, is the Chief Executive Officer of M/s. Fino Payments Bank Limited, a fintech entity functioning as a Bank As a Payment Aggregator (BAPA) with an extensive merchant network across the country. With several decades of experience in the banking sector, the petitioner held multiple senior positions, including Chief Operating Officer and Chief Financial Officer, within the holding company M/s. Fino Pay Tech Limited.

The respondent, the Union of India, acted through the officers of the Directorate General of GST Intelligence (DGGI), which had been conducting a detailed investigation into alleged GST evasion orchestrated through illegal online gaming platforms, facilitated by fintech intermediaries including payment banks, payment aggregators, payment gateways, and third-party technology service providers.

Sequence of Events Leading to Arrest

Understanding the chronology of events is essential to appreciate the Court's reasoning:

  1. 19.01.2026 — DGGI issued a letter to the authorised signatory of M/s. Fino Payments Bank Limited, seeking data and documents related to two entities: M/s. Oceanique Web Solutions Private Limited and M/s. Webwin IT Hub Solutions Private Limited.

  2. 25.01.2026 and 09.02.2026 — As the requested information was not furnished, summons were issued to the authorised signatory. A voluntary statement was recorded on 09.02.2026 during the course of inspection.

  3. 11.02.2026 — A further letter was issued seeking outstanding data. The required documents were still not submitted.

  4. 14.02.2026 and 18.02.2026 — Summons were issued directly to the petitioner on his official email address, directing him to appear before the Senior Intelligence Officer at Hyderabad Zonal Unit on 17.02.2026. The petitioner disputed receipt of these summons, though no documentary evidence of non-delivery was placed on record.

  5. 23.02.2026 — Another communication was issued to the authorised signatory directing appearance on 25.02.2026.

  6. 26.02.2026 — Authorisation for search was issued in Form GST INS-01 under Section 67(2) of the CGST Act, 2017 by the Additional Commissioner/Additional Director, DGGI, covering business and residential premises. A simultaneous summons was issued to the petitioner directing him to appear before the Senior Intelligence Officer at 6:30 pm on the same day.

  7. 26.02.2026 (12:39 pm onwards) — Approximately 12 DGGI officers entered the office premises of M/s. Fino Payments Bank Limited and initiated search proceedings. The petitioner's statement was recorded from approximately 6:45 pm onwards.

  8. 27.02.2026 (3:45 am) — The search concluded, as evidenced by the Panchanama drawn upon completion.

  9. 27.02.2026 (3:48 am) — Statement recording of the petitioner also concluded.

  10. 27.02.2026 (5:50 am) — The petitioner was formally arrested under Section 132(1)(i) of the CGST Act. The arrest memo was prepared and grounds of arrest were communicated to him. His signature on the arrest memo was obtained at 6:52 am.

  11. 27.02.2026 (8:30 pm) — The petitioner was produced before the Additional Chief Judicial Magistrate, Esplanade, Mumbai, where a 72-hour transit remand was granted till 8:30 pm on 02.03.2026.

  12. 01.03.2026 — The petitioner was produced before the Special Judge for Trial of Cases under Economic Offences, Hyderabad, under Section 187(1) of the Bharatiya Nagarik Suraksha Sanhita, 2023, and was remanded to judicial custody.

Petitioner's Contentions