the essay of 25 March 2026 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=utf-8"> </head> <body bgcolor="#FFFFFF"> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">MARCH 25, 2026</font></strong></font></font></p> <p align="center"><font color="#FF6633" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong> Custody Clock - Correct Calculation</strong></font></p> <p align="center"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><u><strong>By Vijay Kumar</strong></u></font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><strong>WHEN</strong> Fino Payments Bank CEO Rishi Gupta was arrested on 27 February 2026 by the DGGI, the fiscal world didn't just blink-it tweeted. TV Mohandas Pai, former Infosys CFO, posted on X: </font></font></p> <blockquote><p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">@FinMinIndia and FM @nsitharaman should look at the vast powers given to GST authorities on arrest. What is the necessity to arrest unless prima facie case is made before judicial authorities? This can easily be misused. </font></font></p></blockquote> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The arrest was not just a courtroom matter; it was a headline, a hashtag, and a question mark on the scope of GST enforcement. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">Twenty-five days later, Rishi Gupta is still in jail. And just two days ago, the Telangana High Court held that his arrest was not illegal. <strong><a href="https://taxindiaonline.com/searchcaselaw/details?id=192176&type=caselaw&keyword=null" target="_blank">2026-TIOL-461-HC-TELANGANA-GST</a></strong> </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">This is the story. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><img src="https://admin.taxindiaonline.com/UploadedFiles/Customs/CaseLaws/2026/JestGST250326.JPG" style="height:265px; width:409px"/></font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">When the fiscal bar gathers in full force, you know the matter is no ordinary tax tiff. In the Telangana High Court, the arrest of Fino Payments Bank's CEO became the stage for a heavyweight duel: Dr. Abhishek Manu Singhvi for the petitioner on one side, and Additional Solicitors General B.Narasimha Sharma and N.Venkataraman for the Union and CBIC on the other. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">This was not about bail or jail-it was about whether the arrest itself ticked legally on the constitutional clock. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">While the legal giants sparred over constitutional theory, the reality for Rishi Gupta began much more modestly: with twelve officers and a very long night. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The petitioner before the High Court, Rishi Nand Kishore Gupta is the founding member of M/s.Fino Payments Bank Limited. He claims to be in the banking industry for three decades. He is the recipient of a number of awards and is actively involved in industry forums. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">He contends that he was arrested on 27.02.2026 by the officers of the Directorate General of Goods and Services Tax Intelligence (DGGI) for alleged offence committed in relation to operating illegal online gaming websites with assistance of associated fintech companies, including payment bank/aggregator, payment gateway and third-party technology services providers. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">Around 12:39 pm on 26.02.2026, about 12 officers entered the office of Fino Payments Bank and instructed the employees not to leave the office. Around 6:00 pm, while Rishi Gupta was ready to leave for home, the DGGI team reiterated their directions to remain with them and served summons under Section 70 of the CGST Act. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The recording of his statement started and continued till about 3:48 am on 27.02.2026. Immediately thereafter, the DGGI team handed over the grounds of arrest to the petitioner. He was produced before the Additional Chief Judicial Magistrate, Esplanade Court, Mumbai at 8:30 pm for transit remand. Thereafter, he was produced before the Special Judge for Trial of Cases under Economic Offences, Hyderabad on 01.03.2026 and was remanded to judicial custody. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The petitioner seeks a declaration that his arrest and remand is illegal and violative of his fundamental rights. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The Senior Counsel for the petitioner asserts that the petitioner has been arrested on the ground that he has not cooperated with the investigation and has masterminded the transactions with shell entities thereby defrauding the Goods and Services Tax. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The Senior Counsel contends that while he was in custody, he was under the physical control of an officer exercising coercive powers within the meaning under Section 439 of the Code of Criminal Procedure. The petitioner's arrest commenced from 1:03 pm on 26.02.2026 when his right to move was restricted. The production of the petitioner before the Additional Chief Judicial Magistrate for obtaining transit remand at 8:30 pm on 27.02.2026 is beyond 24 hours timeline. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">As such, the arrest is illegal. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">He submits that the period during which he was medically examined cannot be excluded from 24 hours period mandated for production of the arrested person. He, therefore, submits that the impugned arrest be declared as illegal and the petitioner may be released on bail on furnishing bail bonds with sureties as this Court may deem fit and proper. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">If the arrest was illegal, why bail at all? </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The Additional Solicitor General of India (ASGI) submitted that the investigation had begun with a letter dated 19 January 2026 seeking data on certain entities, namely M/s. Oceanique Web Solutions Pvt. Ltd. and M/s. Webwin IT Hub Solutions Pvt. Ltd. Despite repeated summons issued on 25 January, 9 February, 11 February, 14 February, 18 February, and 23 February, the required data was not provided. Consequently, search authorization was issued on 26 February 2026, and summons served the same day. The search concluded at 3:45 am on 27 February 2026, and the petitioner's statement was recorded until 3:48 am. He was formally arrested at 5:50 am on 27 February 2026, with grounds of arrest served at 6:00 am, and produced before the Additional Chief Judicial Magistrate, Mumbai at 8:30 pm the same day, which the respondents argued was within the 24-hour limit. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The respondents further submitted that evidence revealed the petitioner's involvement in an organized syndicate operating illegal online gaming platforms, routing funds through shell entities and dummy resellers. Transactions amounting to about Rs.10,000 crores were found without invoices, leading to an estimated tax evasion of Rs.2,800 crores. They referred to Section 14A of the CGST Act, under which the petitioner would be treated as a service provider for persons located outside India. Custodial interrogation was said to be necessary, and the Special Judge for Economic Offences, Hyderabad had granted remand. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The Senior Counsel for the petitioner, in reply, submits that the approach of the DGGI to frame the petitioner on alleged grounds of non-cooperation is not tenable in law. </font></font></p> <blockquote><p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">a. That mere non-cooperation of a witness in response to the summons would not be enough to render him/her liable to be arrested; </font></font></p><p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">b. The respondents have failed to show as to how the replies given by the petitioner were characterised as evasive. It is not expected of the investigating agency to expect an admission of guilt from the person summoned and anything short of such admission would be an ‘evasive reply'. </font></font></p><p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">c. In such circumstances, the whole edifice for framing the grounds of arrest is untenable in law. </font></font></p></blockquote> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The DGGI called the replies<em> "evasive." </em>The petitioner said he had given details. The Court didn't buy the argument. In investigations, what is <em>"non-cooperation"</em>? </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The High Court examined the petitioner's claim that his arrest was unconstitutional because he was allegedly in custody from 1:03 pm on 26 February 2026, when officers entered his chamber and restricted his movement. The Court noted that the officers had entered the premises pursuant to a valid search authorization dated 26 February 2026 and a summons issued the same day requiring the petitioner to appear at 6:30 pm. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The petitioner himself admitted in his affidavit that his voluntary statement was recorded from 6:45 pm on 26 February until 3:48 am on 27 February 2026, after which the grounds of arrest were handed over. The search concluded at 3:45 am on 27 February. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">On this basis, the Court held that the petitioner's contention that he was under arrest from 1:03 pm on 26 February was not correct. The arrest legally commenced at 5:50 am on 27 February 2026, as shown in the arrest memo signed by the petitioner. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The Court then addressed the constitutional requirement under Article 22(2) that a person arrested must be produced before a magistrate within 24 hours. It found that the petitioner was produced before the Additional Chief Judicial Magistrate, Esplanade, Mumbai at 8:30 pm on 27 February 2026, which was well within 24 hours of the arrest at 5:50 am. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The Court rejected the argument that the time spent on medical examination should be excluded from the calculation, noting that even including that period, the production was within the constitutional limit. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><em>The petitioner said "custody from 1:03 pm," the respondents said "arrest at 5:50 am." The Court sided with the memo. In GST arrest, no two clocks agree. </em></font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><em>The law does not sleep - nor do the summoned person and the officers! </em></font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">On the substantive allegations, the Court observed that the investigation had revealed the involvement of Fino Payments Bank in an organized syndicate operating illegal online gaming websites with the assistance of fintech companies, payment aggregators, gateways, and technology providers. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">Evidence showed that shell entities and dummy resellers were used to route funds without invoices. Approximately Rs.3,000 crores were involved, with tax evasion estimated at Rs.840 crores. The Court noted that three programme managers or resellers associated with the company were found to be non-functioning and dummy entities, and that the company had failed to conduct inspections or audits to identify risky merchants. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The petitioner's recent visits abroad to jurisdictions linked with the syndicate were also considered relevant. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The Court concluded that the offences alleged against the petitioner fell under the CGST Act, which are cognizable and non-bailable, punishable with imprisonment up to five years and fine. It held that sufficient material had been collected during investigation to justify the arrest, and that the grounds of arrest communicated to the petitioner were valid. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The Court emphasized that the petitioner had failed to establish any violation of Article 22(2) or other constitutional rights. Accordingly, the writ petition was dismissed, with the Court holding that the arrest was lawful, within constitutional timelines, and supported by evidence. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">This was not a bail versus jail battle. The High Court had to decide something more fundamental: was the arrest itself lawful? And here, with top lawyers of the country arguing, the verdict was clear-arrest stood. </font></font></p> <p align="justify"><font color="#ff0000"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">Until next week</font></font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">Comments/feedback welcome at <a href="mailto:vijaywrite@tiol.in">vijaywrite@tiol.in</a> or 9848111243 (WhatsApp)</font></font></p> </body> </html>