Inside the Investigation: What Sparked the GST Enforcement Storm
27 February 2026: The Directorate General of GST Intelligence took enforcement action.
Officials detained Rishi Gupta, who serves as Managing Director and CEO of Fino Payments Bank.
The action relates to suspected violations of GST laws, particularly provisions under the CGST Act, 2017 and corresponding SGST statutes.
The arrest was reportedly made after preliminary findings suggested possible tax compliance irregularities.
Custody Details:
On early morning 27 February 2026 (around 3:55 a.m.), authorities detained Rishi Gupta in Mumbai under Sections 132(1)(a) and 132(1)(i) of GST law, provisions dealing with alleged tax evasion and improper use of input tax credit.
Nature of Probe:
The action forms part of a larger investigation by the Directorate General of GST Intelligence into a suspected ₹5,000-crore unlawful online gaming and fintech operation.
Alleged Transaction Trail:
Investigators are examining dealings involving Wegofin Digital Solutions, a tech service entity said to have routed transactions through the API systems of Fino Payments Bank.
Bank’s Official Response:
The bank clarified that the inquiry relates to certain external partners rather than its own GST filings. It asserted that its staff had no direct role, though authorities are reportedly reviewing whether banking channels were used to process disputed transactions.
Interim Management Move:
To maintain operational continuity, the board assigned CFO Ketan Merchant to supervise routine functioning on a temporary basis.
Market Reaction:
After the development became public, shares of the bank dropped roughly 7.5%, closing near ₹192.45 on the BSE.—If you want, I can also convert this into a short “Explainer Box” version for quick-reading audiences (useful for mobile viewers).
When Statute Speaks — Legal Sections That Justified the Arrest
Relevant provisions under the Central Goods and Services Tax Act, 2017
Section 69 — Power to Arrest Authorizes the Commissioner to order arrest if there is reason to believe a person committed specified GST offences.
Section 132 — Punishable Offences cover tax offences such as fake invoicing, tax evasion, fraudulent ITC claims.
Provides imprisonment up to 5 years + fine depending on amount involved.
Section 67 — Inspection, Search & Seizure allows authorities to search premises and seize documents if tax evasion is suspected.
Section 70 — Power to Summon officers can compel attendance, document production, and statements.
Section 74 — Determination of Tax Due (Fraud Cases)Applies where tax was unpaid due to fraud, suppression, or misstatement.
Section 122 — Penalties Monetary penalties for wrongful tax practices.
Section 137 — Offences by Companies Makes directors or responsible officers liable if offence committed with consent or negligence.
Section 138 — Compounding of Offences Allows settlement of certain offences upon payment of compounding fee.
The development has sparked debate about possible regulatory excess, as several industry voices have expressed concern over the swift detention of the chief executive of a supervised financial institution for conduct allegedly linked to third-party associates. Nirmala Sitharaman has stated that the government intends to examine the issue.
