Telangana High Court Reserves Order on Fino Payments Bank MD’s Arrest in GST Evasion Case
The Telangana High Court on March 11 reserved its decision on a petition filed by the Managing Director of Fino Payments Bank Limited. The petition challenges his arrest in a GST evasion investigation related to merchants using the bank’s payment platform.
The court said it will deliver its judgement on March 17 after hearing arguments from both sides. Senior lawyer Abhishek Manu Singhvi, representing the Managing Director, told the court that the MD had no involvement in any GST evasion. He said the bank only provides a digital platform that allows merchants to accept payments.
Singhvi explained that GST responsibility lies with the sellers or buyers involved in the transaction, not with a payment platform that only processes payments.
He also said there are no accusations of GST evasion against the managing director personally. The allegations relate only to some merchants who used the platform.
According to him, the bank follows rules set by the Reserve Bank of India when adding or removing merchants from its platform. If any merchant is found violating the rules, they are removed from the platform.
Singhvi also argued that the managing director does not personally handle the onboarding of merchants, so he cannot be held criminally responsible for their actions.
To show good faith, Singhvi told the court that about Rs 28 crore in GST dues had already been paid.
He also pointed out that other payment companies, such as HDFC Bank Limited and Razorpay Software Private Limited, which operate in a similar way, have not been accused in this case.
The lawyer referred to an earlier judgement by the Bombay High Court in the Mahesh Gada case, which said that intermediaries should be treated differently from the main people responsible for tax evasion.
On the other side, N. Venkataraman, the Additional Solicitor General, represented the government and defended the arrest.
He said the investigation found several violations of the GST law, including many transactions where invoices were not issued.
According to the authorities, analysis of transaction data suggests that about Rs 10,000 crore worth of transactions were processed without invoices, which they believe could indicate a large network of tax evasion involving many entities.
Additional Solicitor General N. Venkataraman said the arrest was made after following proper legal procedures and necessary approvals were taken. He also said a summons had already been issued during the investigation.
The government described the case as a serious economic offence and asked the court to allow continued questioning of the accused in custody.
During the hearing, the judges asked whether the seizure list and panchnama had been submitted to the court. The government lawyer confirmed that they had.
The court also mentioned that summonses were earlier issued for details about 177 entities connected to the transactions. However, authorities said the investigation was delayed because a vice president of the bank did not appear before them.
In response, Singhvi denied that the bank failed to cooperate. He presented documents and emails showing that the summons was not properly delivered.
He also cited an earlier ruling of the Supreme Court of India in the Pankaj Bansal case, which says that authorities must strictly follow legal procedures and clearly inform a person about the reasons for arrest in economic offence cases.
After hearing all the arguments of both sides, the High Court ordered that a fresh summons be issued to the vice president and reserved its decision on the petition challenging the arrest.