The DGGI is investigating GST evasion by Fino Payments Bank, which is suspected of using shell companies and payment aggregators to funnel illicit funds generated by online money gaming, sources said on Saturday. “Investigation conducted so far has brought out the involvement of a senior bank functionary in the fraud, who has been placed under arrest,” they said. GST authorities have arrested its managing director and CEO, Rishi Gupta for violating the law related to the Goods and Services Tax (GST), Fino Payments Bank had said on Friday.
DGGI Allegations
Sources in the know of the case said that the initial investigation by the Directorate General of GST Intelligence (DGGI) is investigating a case of online money gaming, which is banned in India. Initial investigation, sources said indicated that GST evasion of several crores involving many shell and non-existent entities, payment aggregators, etc, which have been used to funnel the illicit funds being generated by online money gaming.
Fino Payments Bank CEO has been arrested under the provisions of Sections 132(1)(a) and 132(1)(i) of the CGST and SGST Act, 2017. However, Finance Minister Nirmala Sitharaman on Saturday promised to look into the arrest of Fino Payments Bank managing director and CEO Rishi Gupta, in response to being tagged on a post on X, alleging government overreach in the issue.
“Thanks for sharing this. Will check,” responded the FM on a post by former CFO and board member at Infosys Mohandas Pai.
Fear-Free Atmosphere
In the post, Pai had written: “How can a CEO of a regulated bank be arrested for an issue with a business partner? Is this not overreach? @FinMinIndia has given vast powers for GST. What is the safeguard for citizens against misuse?” Pai further said there has to be a “fear-free atmosphere for business” and that regulatory overreach distorts the law.
The arrest sparked a public debate on executive accountability and enforcement powers, with many industry leaders questioning the move. Anupam Mittal, founder, Shaadi.com, posted: “Don’t know the full story behind Fino payments CEO Rishi Gupta’s arrest, but overreach by tax authorities & judiciary are common. I am also fighting baseless FIRs right up to Supreme Court…We must get rid of these onerous provisions and create an enabling environment if we want world-beating companies coming out of India.”
In a statement on Saturday, Ketan Merchant, chief financial officer of Fino Payments Bank, said the bank has strong corporate governance, compliance framework and robust processes in place. “As a regulated entity, we are compliant with all the laws, including GST,” adding, “The bank and its MD & CEO Mr Rishi Gupta have nothing to do with the actions of the programme managers,” he said. He added that the bank would provide full assistance to the authorities and reassured investors and customers that business operations would continue without disruption.