1 Pay Mobileware Private Limited vs Union Of India Through Ministry Of Finance

CNR No : HCBM020310962026

2026:BHC-OS:22667-DB
PRADNYA
MAKARAND
BHOGALE

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION

WRIT PETITION NO.4586 OF 2026
Digitally signed by
PRADNYA
MAKARAND
BHOGALE
Date: 2026.10.17
14:51:57 +0530
1Pay Mobileware Private Limited
A Company incorporated under the
provisions of the Companies Act,
2013, bearing CIN No.
U74999MH2019PTC320148,
having its registered office at C-308,
Kanakia Zillion, LBS Marg, BKC
Annexe, Kurla (West),
Mumbai – 400070.
Through its Authorized Signatory
Mr. Navin Bangera … Petitioner
Versus
1. Union of India
(through the Ministry of Finance)
GST Bhavan, 115 Maharshi Karve Road,
Churchgte, Mumbai – 20.
2. Additional Director General
Directorate General of GST
Intelligence (DGGI) Hyderabad
(Hyderabad Zonal Unit) Having its
office at H.No.I-63/2/212, Plot Nos.
212 & 213, Block-B, Kavuri Hills,
Guttalabegumpet, Madhapur,
Hyderabad – 500033.
3. Additional Director General
Directorate General of GST
Intelligence (DGGI) Mumbai
West Zonal Unit (Mumbai): 3rd
Floor, NTC House, 15, N.M. Marg,
Ballard Estate, Mumbai – 400001,
Maharashtra.
4. Principal Director
DGGI Headquarters
3rd, 4th & 5th Floors, MTNL
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Building, Sector-6, Dwarka,
New Delhi – 110075 .… Respondents

Mr. Darius Shroff, Senior Advocate a/w Adv. Ishaan V. Patkar,
Adv. Sujit Lahoti, Adv. Parth P. Shah, Adv. Kedar Nayak,
Adv. Diya Chordia i/b. M/s. Sujit Lahoti & Associates for the
petitioner.
Adv. Jitendra B. Mishra a/w Adv. Sangeeta Yadav, Adv. Umesh
Gupta, Adv. Ashutosh Mishra, for the Respondents.

CORAM : M. S. KARNIK &
SANDESH D. PATIL, JJ.
th
DATE : 16 OCTOBER 2026
JUDGMENT (PER M. S. KARNIK, J.) :
1. With the consent of the parties, we have heard the writ
petition finally. This writ petition filed under Article 226 of the
Constitution of India seeks the following substantive reliefs :-
“(a) Issue a writ, order or direction in the nature of
certiorari to call for the records of the proceedings relating to
the Impugned Provisional Attachment(s) of Petitioner’s Bank
Accounts (Exhibit A-1 to A-3), and after examining the legality
and propriety and correctness thereof, quash and set aside the
same;
(b) Issue a writ, order or direction in the nature of
mandamus and direct the Respondents to conduct any
investigation under the CGST Act, 2017 strictly in accordance
with the Guidelines for conducting investigation in certain
cases dated March 30, 2024;
(c) In case of the ongoing investigation, initiated and
conducted by Respondent No.2 under the CGST Act, 2017, is
primarily directed against the Petitioner, then in that case,
issue a writ, order or direction in the nature of mandamus for
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directing the Respondent No.2 to transfer such investigation
to the Respondent No.3 with directions to it to conduct such
investigation as per applicable provisions of law;
(g) Issue a writ, order or direction in the nature of
certiorari to call for the records of the proceedings relating to
the Provisional Attachment Orders at Exhibit A4, and the
partial defreezing orders at Exhibit N and O (to the extent they
continue the attachment), and after examining the legality and
propriety and correctness thereof, quash and set aside the
same.”
2. Briefly stated, the case of the respondents against the
petitioner is that though the petitioner claims to be a payment
aggregator, they may be playing a significant role in the alleged
evasion of GST by an organised online money gaming syndicate.
The petitioner has failed to cooperate with the investigation and it
was found that the Principal Place of Business (PPOB) and the
Additional Place of Business (APOB) of the petitioner were found
locked. No documents were found at the business premises
despite the statutory requirement to maintain records and the
server was found empty. This reveals that the petitioner’s role
may extend beyond that of a payment aggregator and that the
petitioner may be playing a significant role in the alleged evasion
of GST by an organised online money gaming syndicate.
3. The facts of the present case are that the petitioner was
incorporated as a private limited company under the Companies
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th th
Act, 2013 on 25 January 2019. On 14 May 2024, RBI issued a
certificate of authorisation to operate as an online Payment
Aggregator to the petitioner. RBI further issued a certificate of
rd
authorisation dated 23 June 2026 to operate as both an online
th
and offline Payment Aggregator to the petitioner. On 9 August
2026, the HR of the petitioner sent an email to its employees
informing them to work from home due to shifting of the office.
th
On 10 August 2026, the respondent No.2, without any prior
intimation, sealed the premises of the petitioner situated at Kurla
(West), Mumbai.
4. The petitioner’s HDFC current bank account
No.6310, HDFC escrow bank account No.1241 as well as
ICICI current bank account No.3439 were provisionally
th
attached on or around 10 August 2026 pursuant to a notice
under Section 83 of the Central Goods and Services Tax Act, 2017
(“CGST Act”, for short) issued by respondent No.2. The petitioner
th
received three summons on 17 August 2026 addressed to its
Director, Chief Risk Officer and Chief Technology Officer. The
th
petitioner addressed an email to respondent No.2 on 18 August
2026, inter alia, providing details of various merchants associated
with the petitioner, to show that Governments like the
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Government of Bihar, Government Entities like Mumbai
University, Institute of Chartered Accountants of India, IRCTC,
Greater Noida Industrial Development Authority, Meerut
Industrial Development Authority, MHADA etc. used petitioner’s
platform and thus the petitioner is not some disreputable entity.
5. The respondent No.2 issued one more order under
th
Section 83 of the CGST Act on 24 August 2026 to Kotak
Mahindra Bank directing provisional attachment of the
petitioner’s escrow bank account No.*4006. The respondent
th
No.2 issued an intimation dated 25 August 2026 of personal
hearing to the petitioner under Rule 159(5) of the Central Goods
and Services Tax (CGST) Rules, 2017 (“CGST Rules”, for short). A
th
personal hearing was afforded to the petitioner on 28 August
2026. Written submissions/objections on behalf of the petitioner
vis-a-vis freezing of the bank accounts were submitted vide email
to respondent No.2.
6. The petitioner’s IDFC Bank account No.*9037 was
th
provisionally attached on 28 August 2026 pursuant to a notice
under Section 83 of the CGST Act by respondent No.2. This writ
rd
petition is filed on 3 September 2026.
7. Mr. Darius Shroff, learned Senior Advocate for the
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petitioner submitted that the notice issued under Section 83 of the
CGST Act suffers from jurisdictional defects. It is submitted that
the objections filed by the petitioner are disposed of by the orders
th th
dated 4 September and 18 September 2026. The observations
made in the orders are vague and cryptic. It is pointed out that the
operational restrictions on petitioner’s bank account No.*1241
with HDFC Bank were partially lifted by respondent No.2 to the
extent of making payment of dues to Government entities,
however, the other bank accounts continue to remain frozen.
8. Learned Senior Advocate for the petitioner made
exhaustive submissions that the jurisdictional pre-conditions for a
valid provisional attachment under Section 83 of the CGST Act are
not at all fulfilled in the present case. It is submitted that the
petitioner is not a fly by night operator and in fact is a trusted
payment platform similar to Google Pay / PhonePe dealing with
third-party merchants/sellers including important government
entities. Thus, it is the submission of learned Senior Advocate that
the petitioner is a trusted partner of many government entities
and that the petitioner’s business has been put to live financial
death for eight weeks. Learned Senior Advocate for the petitioner
submitted that the bank accounts of the petitioner have been
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frozen contrary to the mandate in Radha Krishan Industries vs.
1
State of Himachal Pradesh and others . Learned Senior Advocate
relied upon the decision of the Hon’ble Supreme Court in M/s.
Armour Security (India) Ltd. vs. Commissioner, CGST, Delhi East
th
Commissionerate & Anr. dated 14 August 2025 in Special Leave
Petition (C) No.6092 of 2025 in support.
9. On the other hand Mr. Mishra, learned counsel for the
respondents has invited our attention to the detailed affidavit-in-
reply filed by respondent No.2. We have gone through the stand
of the respondent No.2 in the affidavit-in-reply with the assistance
of Mr. Mishra. Mr. Mishra submitted that the petitioner has failed
to cooperate with the investigation and has not furnished the
documents which they had undertaken to provide during the
recording of the statements of their Directors and key managerial
th
personnel. It is submitted that on 10 August 2026, the PPOB and
the APOB of the petitioner were found locked, and none of the
other Directors or key managerial personnel could be contacted as
their mobile phones were switched off. It is submitted that the
petitioner’s explanation that their employees had been instructed
to work from home on the said date is untenable. It is submitted
that no documents were found either at business premises, despite
1 (2021) 6 SCC 771
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the statutory requirement to maintain records thereat and that the
petitioner’s server was found empty.
10. Mr. Mishra submitted that the aforesaid circumstances
prima facie indicate that the petitioner had shifted material
relevant to the investigation to an undisclosed location and was
evading disclosure thereof. It is contended that these
circumstances indicate the petitioner’s role may extend beyond
that of a payment aggregator and that they may be playing a
significant role in the alleged evasion of GST by an organised
online money gaming syndicate.
11. Mr. Mishra submitted that while the question as to
whether the petitioner is taxable person is a matter of
investigation, their bank accounts could nevertheless be
provisionally attached under Section 122 (1-A) of the CGST Act.
According to respondent No.2, the petitioner is beneficiary of
transactions covered by Section 122 (1) of the CGST Act, and the
provisional attachment was necessary to protect the interests of
the revenue. In view of the petitioner’s alleged failure to furnish
relevant documents, non-maintenance of records at their
registered business premises and the empty server, the possibility
of diversion of funds could not be ruled out. It is submitted that
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proceedings under Section 67 of the CGST Act, falling under
th
Chapter XIV thereof, commenced on 10 August 2026, when the
premises of the petitioner were found locked. Accordingly, the
provisional attachment orders passed subsequently on the same
date are stated to be legal and valid. It was further contended that
the petitioner’s submission that the issuance of summons under
Section 70 of the CGST Act is contrary to law is without any
substance.
12. Mr. Mishra submitted that the petitioner had not filed
objections under Rule 159 (5) of the CGST Rules supported by
relevant documents or material to justify the release of the
provisionally attached bank accounts. It was pointed out that,
upon the production of relevant documents or material, the
th
Additional Director General had passed orders dated 4
th
September 2026 and 18 September 2026 under Rule 159(5) of
the CGST Rules, thereby de-freezing the escrow accounts relating
to twelve entities. Mr. Mishra submitted that the petitioner also
has availed of the remedy under Rule 159(5) of the CGST Rules
and to this end our attention is invited to the decision of this Court
2
in Jaychem Enterprise Pvt. Ltd. vs. Additional Director General .
Reliance is placed on the decision of this Court in Ashok Kumar
2 (2023) 5 Centax 103 (Bom.)
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3
Vishwakarma vs. Union of India in support of the submission
that the petitioner had failed to furnish cogent reasons warranting
de-freezing of the provisionally attached bank accounts.
13. Mr. Mishra relied upon the decision of the Delhi High
Court in Om Prakash Gupta vs. Principal Additional Director
4
General, DGGI more particularly paragraphs 12 to 16 in support
of the proposition that there is no requirement that the material
forming the basis of the Commissioner’s opinion must be
incorporated in an order passed under Section 83 (1) of the CGST
Act. It was further submitted that Special Leave Petition preferred
against the said judgment was dismissed by the Hon’ble Supreme
rd
Court by the order dated 3 March 2025 in Om Prakash Gupta vs.
5
Principal Additional Director General .
14. Mr. Mishra then submitted that the Commissioner’s
reasons to believe for provisionally attaching a bank account is not
an appealable order and that recording such reasons in the official
rd
file is sufficient. Reliance is placed on CBIC Circular dated 23
February 2021, which requires the reasons to believe to be
recorded in the file by the Commissioner. In support Mr. Mishra
relied upon the decision of this Court in Originative Trading Pvt.
3 2024 (84) G.S.T.L. 473 (Bom.)
4 (2025) 28 Centax 291 (Del.)
5 (2025) 28 Centax 313 (S.C.)
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6
Ltd. vs. Union of India more particularly paragraph 22 thereof. It
is submitted that the Commissioner had recorded the reasons to
believe in the official file before directing provisional attachment
of the petitioner’s bank accounts and that the reasons had been set
th
out in the affidavit-in-reply and in the orders dated 4 September
th
2026 and 18 September 2026.
15. So far as the investigation is concerned, it is submitted by
Mr. Mishra that, up to the date of filing of the affidavit-in-reply,
approximately 88 merchants had been found to be non-existent or
non-functional at their respective PPOB and were allegedly
involved in online money gaming, as revealed by the analysis of
the petitioner’s GSTR-1 data. Mr. Mishra was at pains to point out
that owing to the petitioner’s failure to furnish the relevant
documents, the total number of entities allegedly involved in
evasion could not be ascertained. Learned counsel further
submitted that the petitioner’s insistence that confidential
investigative information be disclosed to them before they
furnished complete details of the transactions relating to the said
entities was unjustified. It is submitted that the petitioner ought to
have been required to furnish the relevant transaction details to
the banks maintaining their escrow accounts and that there was
6 2022 (65) G.S.T.L. 144 (Bom.)
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no justification for withholding such information from respondent
No.2, which is tasked with preventing GST evasion. It was
submitted that disclosure of the details of the said entities to the
petitioner, whose role in the alleged evasion was under
investigation, would prejudice the investigation.
16. We have heard Mr. Darius Shroff, learned Senior
Advocate for the petitioner and Mr. Jitendra B. Mishra, learned
counsel for the respondents. We have gone through the pleadings
and the detailed affidavit-in-reply filed on behalf of the
respondents. We have also perused the impugned orders and the
materials on record.
17. Before we proceed to analyse the submissions it would be
apposite to refer to some of the relevant provisions of the CGST
Act. Section 83 of the CGST Act provides for provisional
attachment to protect revenue in certain cases. The provision is
extracted for facility of convenience reading thus :-
“ 83. Provisional attachment to protect revenue in
certain cases. -
(1) Where, after the initiation of any proceeding under
Chapter XII, Chapter XIV or Chapter XV, the Commissioner is
of the opinion that for the purpose of protecting the interest of
the Government revenue it is necessary so to do, he may, by
order in writing, attach provisionally, any property, including
bank account, belonging to the taxable person or any person
specified in sub-section (1A) of Section 122, in such manner as
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may be prescribed.
(2) Every such provisional attachment shall cease to have
effect after the expiry of a period of one year from the date of
the order made under sub-section (1).”
18. Rule 159 of the CGST Rules providing for provisional
attachment of property reads thus :-
“ Rule 159. Provisional attachment of property. -
(1) Where the Commissioner decides to attach any property,
including bank account in accordance with the provisions of
section 83, he shall pass an order in FORM GST DRC-22 to that
effect mentioning therein, the details of property which is
attached.
(2) The Commissioner shall send a copy of the order of
attachment [in FORM GST DRC-22] to the concerned Revenue
Authority or Transport Authority or any such Authority to place
encumbrance on the said movable or immovable property,
which shall be removed only on the written instructions from
the Commissioner to that effect.
(3) Where the property attached is of perishable or hazardous
nature, [and if the person, whose property has been attached]
pays an amount equivalent to the market price of such property
or the amount that is or may become payable [by such person],
whichever is lower, then such property shall be released
forthwith, by an order in FORM GST DRC-23, on proof of
payment.
(4) Where [such person] fails to pay the amount referred to in
sub-rule (3) in respect of the said property of perishable or
hazardous nature, the Commissioner may dispose of such
property and the amount realized thereby shall be adjusted
against the tax, interest, penalty, fee or any other amount
payable [such person].
(5) Any person whose property is attached may [file an
objection in FORM GST DRC-22A] to the effect that the
property attached was or is Not liable to attachment, and the
Commissioner may, after affording an opportunity of being
heard to the person filing the objection, release the said
property by an order in FORM GST DRC- 23.
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(6) The Commissioner may, upon being satisfied that the
property was, or is No longer liable for attachment, release such
property by issuing an order in FORM GST DRC- 23.”
19. Section 70 of the CGST Act is a power to summon
persons to give evidence and produce documents. Section 70 of
the CGST Act reads thus :-
“ Section 70. Power to summon persons to give
evidence and produce documents.-
(1) The proper officer under this Act shall have power to
summon any person whose attendance he considers necessary
either to give evidence or to produce a document or any other
thing in any inquiry in the same manner, as provided in the
case of a civil court under the provisions of the Code of Civil
Procedure, 1908 (5 of 1908).
(1-A) All persons summoned under sub-section (1) shall be
bound to attend, either in person or by an authorised
representative, as such officer may direct, and the person so
appearing shall state the truth during examination or make
statements or produce such documents and other things as may
be required.
(2) Every such inquiry referred to in sub-section (1) shall be
deemed to be a “judicial proceedings” within the meaning of
Section 193 and Section 228 (45 of 1860) of the Indian Penal
Code.”
20. In the present case, the petitioner is challenging four
provisional attachment orders issued under Section 83 of the
th th th
CGST Act dated 10 August 2026, 24 August 2026 and 28
August 2026 by which the petitioner’s current and RBI-mandated
escrow accounts have been frozen. The question is whether the
said freeze is without jurisdiction contrary to Section 83 and
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Radha
contrary to the mandate of the Hon’ble Supreme Court in
Krishan Industries
(supra). Notably, no separate provisional
attachment order was issued for freezing the petitioner’s HDFC
escrow account ending with 1241. This is evident from the stand
adopted in paragraph 9 of the respondent No.2’s affidavit-in-
reply. A perusal of paragraph 3 of the provisional attachment
order demonstrates that the attachment extended to all accounts
linked to the petitioner’s PAN number.
21. The case of the respondent No.2 relates to the allegation
of money laundering by unnamed third parties. There is no
whisper of any GST liability of the petitioner. As indicated earlier
the stand of the respondents is that there is a suspicion that the
petitioner’s role may extend beyond that of a payment aggregator
and that they may be playing a significant role in the alleged
evasion of GST by an organised online money gaming syndicate.
The matter is under investigation.
22. The petitioner is a payment aggregator authorised by the
RBI. It operates a payment platform similar to Google Pay /
PhonePe. Third party merchants/sellers and their customers
(buyers) use the platform only for the purpose of making online
payments which are only through banking channels. The entire
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money received from online purchasers is directly received in the
escrow account that is mandated by the RBI. It is the submission
of learned Senior Advocate for the petitioner that the money does
not belong to the petitioner. The petitioner only receives a
commission. The third-party merchants/sellers including
government entities such as IRCTC, the Government of Bihar
(OGRAS), ICAI, MHADA, the University of Mumbai, the Agra and
Greater Noida Development Authorities including Fast-Tag
payments through the National Electronic Toll Collection system
governed by NHAI are utilising the services of the petitioner as a
payment aggregator.
23. Instead of extracting the relevant portions of the
th
impugned order dated 4 September 2026 which is a provisional
attachment under Section 83 of the CGST Act, it would be
necessary to extract the order in its entirety, to appreciate the rival
submissions in context. The order of provisional attachment
th
dated 4 September 2026 reads thus :-
“To
M/s 1Pay Mobileware Private Limited
[GSTIN: 27AABCZ3186E1Z7],
C/308, Kanakia Zillon Bldg, LBS Marg,
Kurla West, Mumbai,
Maharashtra-400070
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Sub: Provisional attachment under Section 83 of
the CGST Act, 2017-Objections by the taxpayer-
Personal Hearing Conducted-Subsequent
Proceedings-Reg
*
Please refer to FORM GST DRC-22 dated 10.08.2026,
issued under Section 83 of the Central Goods and Services Tax
Act, 2017 (hereinafter referred to as the “CGST Act”), wherein
the bank accounts of M/s 1Pay Mobileware Private Limited
(PAN: AABCZ3186E), hereinafter referred to as “M/s 1Pay” or
“the taxpayer”, were provisionally attached by way of debit
freeze. The said action was taken as the taxpayer was found to
be involved in an organised online gaming syndicate engaged in
large-scale financial transactions through multiple fintech
companies and shell entities/merchant establishments,
allegedly used for routing and layering funds generated from
online gaming activities without payment of the applicable
GST.
In pursuance of the aforesaid DRC-22, HDFC Bank
marked debit freeze on the following bank accounts maintained
by M/s 1Pay:
Sl. Bank Account Type of Name of the Branch
No. No account
1 50200062341241 Current-Escrow Santacruz Branch
2 50200038266310 Current Bandra East-Kalanagar
2. In response to DRC-22, the taxpayer, vide emails dated
18.08.2026 and letter dated in compliance 24.08.2026,
requested de-freezing of the aforesaid bank accounts.
Accordingly, in compliance with the principles of natural
justice and the provisions of Rule 159(5) of the CGST Act, 2017,
an opportunity of personal hearing was granted on 15.08.2026,
with appearance scheduled for 28.08.2026.
3. Accordingly, the personal hearing was conducted on
28.08.2026, wherein Shri Omkar Prakash Kulkarni, Director of
M/s 1Pay Mobileware Private Limited, appeared on behalf of
the taxpayer. During the course of the personal hearing, Shri
Omkar Prakash Kulkarni submitted that the taxpayer would
provide the necessary documents, including :
i. Copy of the Escrow Agreements;
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ii. Settlement Account details of merchants along with
the SOP of the settlement process; and
iii. Copy of the Agreement between M/s 1Pay and Indian
Bank regarding merchants referred by M/s Nalsan
Enterprises.
3.1 Further, vide letter dated 28.08.2026, the taxpayer, inter
alia, made the following submissions.
i. The attached escrow account contains large sums of
money belonging to Government/public-sector/statutory
entities as tabulated below.
Merchant Character of the Amount lying
Merchant unsettled in
Escrow (in Rs.)
Undertaking of the
Government of Tamil
Nadu
5,18,79,000.00
Tamil Nadu Power
Finance and
Infrastructure
Development
Corporation Ltd.
4,10,91,091.05
Indian Railway
Catering and Tourism
Corporation (IRCTC)
Public sector
undertaking of the
Government of India,
Ministry of Railways
HDBC Bank Limited Scheduled commercial
bank and the Escrow
Agent itself
1,88,96,012.97
1,35,64,035.00
The institute of
Chartered
Accountants of India
Statutory body
constituted under the
Chartered
Accountants Act, 1949
LIC Housing Finance Subsidiary of the Life
Limited Insurance Corporation
of India
1,28,08,257.00
Sub-Total 13,82,38,396.02
ii. They participate in FASTag/NETC settlements and
that amounts relating to toll collections are lying unsettled
because of the attachment and continuing the freeze is causing
disruption to toll operators, banks, fleet owners and ordinary
road users.
iii. The taxpayer has also placed reliance on the
judgment of the Hon’ble Supreme Court in Radha Krishan
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Industries v. State of Himachal Pradesh, (2021) 6 SCC 771, and
has contested the invocation of Section 83 of the CGST Act,
2017, submitting that the conditions prescribed for exercise of
the power of provisional attachment are not satisfied in the
present case.
iv. The present attachment has hampered the business
and they are unable to pay the salaries, vendor payments and to
remit statutory dues like GST, TDS and provident fund
contributions.
v. They have specifically requested for unfreezing of the
transactions pertaining to the govt/public sector/statutory
entities whose credibility is beyond banks doubt and the
NETC/Fastag settlements involving toll operators, banks and
fleet owners.
4. HDFC Bank vide its email dated 02.09.2026 has informed
that Account No.50200062341241 is a regulated Escrow
account maintained as per the RBI’s Payment Aggregator
guidelines. The funds lying in the account represent merchant
settlement amounts payable to various beneficiaries, including
several large PSU/Government-linked merchants. Due to the
current freeze, the customer is unable to process time-bound
merchant settlements, resulting in operational disruption and
potential non-compliance with RBI-prescribed settlement
timelines. Further, vide email dated 03.09.2026, HDFC bank
has submitted that, due to freezing of the Escrow Account No.
50200062341241, several Government Departments and PSUs
were unable to receive settlements, resulting in operational
disruption and potential customer issues. HDFC Bank
requested that settlements in respect of the aforesaid
Government/PSU entities be permitted. HDFC Bank has
furnished the details of the following Government/PSU entities
in this regard :
i. Indian Railway Catering and Tourism Corporation;
ii. The Institute of Chartered Accountants of India;
iii. HDFC Bank Ltd.;
iv. Tamil Nadu Power Fin and Infrastructure
Development Corporation Ltd.;
v. LIC Housing Finance Ltd.;
vi. Bharat Petroleum Corporation Ltd.;
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vii. Rehabilitation Council of India; and
viii. Jorhat Municipal Board.
5. Discussions
I have carefully examined the written submissions made by
the taxpayer in response to the aforesaid FORM GST DRC-22
dated 10.08.2026, the emails dated 18.08.2026 and letter
dated 24.08.2026, the submissions made during the personal
hearing held on 28.08.2026, as well as the material available
on record in the ongoing investigation. Upon such examination,
the following facts emerge :
5.1 Intelligence developed by the officers during the course of
investigation has revealed that M/s. 1Pay Mobileware Private
Limited is one of the key masterminds involved in
orchestrating a large-scale financial transaction network. The
investigation has further revealed that the syndicate allegedly
facilitated the onboarding of several non-existent, fictitious or
unauthorised “merchants” onto the platform of the Payment
Aggregator. The investigation indicates that these merchants
were fictitious entities created solely for the purpose of routing
and layering illicit funds allegedly generated through online
money gaming activities, in respect of which the applicable GST
liability was allegedly not discharged.
5.2 During the course of investigation, it has further been
revealed that M/s 1Pay was instrumental in onboarding the
aforesaid fictitious entities as merchants without following the
due diligence and verification prescribed under the applicable
RBI guidelines relating to KYC. M/s 1Pay, being a payment
aggregator licensed by the RBI, was responsible for
undertaking necessary verification and preventing
fraudulent/illegal activities. However, the investigation has
observed that M/s 1Pay knowingly onboarded
non-existing/dummy merchants for routing funds relating to
online gaming activities, thereby causing serious prejudice to
the financial and institutional integrity of the system and
resulting in substantial loss to the Government exchequer.
These findings constitute material circumstances relevant for
examining whether the bank accounts through which the
aforesaid transactions were routed are required to continue to
remain provisionally attached for protecting the interests of
Government revenue.
5.3 During the course of investigation, summons were issued
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to the CEO and Ex-CEO of M/s 1Pay, who were stated to be
looking after the day-to-day activities of the company. Both the
persons have not complied with the summons. Further, the
voluntary statements of Shri Navin Bangera, CFO of M/s 1 Pay
and Shri. Omkar Prakash Kulkarni Director of M/s 1 Pay were
recorded, wherein they have submitted that Shri Bhalchandra
Prabhu, CEO and Shri Abhijeet Sehgal, Ex- CEO, were looking
after the day-to-day operations of the company. The aforesaid
persons also undertook to provide various records and data
which, however, have not been provided till date. The aforesaid
information is material for tracing the flow of funds, identifying
the actual merchants and resellers, determining the nature and
volume of transactions processed through the platform and
quantifying the GST liability, if any, arising from the activities
under investigation.
5.4 Further, During the personal hearing conducted on
28.08.2026, Shri Omkar Prakash Kulkarni, Director of M/s 1
Pay was specifically asked to submit the following documents :
i. Copy of the Escrow Agreement;
ii. Settlement Account details of merchants along with
SOP of the settlement process; and
iii. Copy of the Agreement between M/s 1Pay and Indian
Bank regarding merchants referred by M/s Nalsan
Enterprises.
However, the taxpayer has failed to furnish the
data/documents till date. Thus, despite being afforded an
opportunity of personal hearing and having undertaken to
furnish the relevant documents, the taxpayer has failed to
further the records which are relevant to the matter on hand.
5.5 The continued non-compliance with the summons issued
to Shri Bhalchandra Prabhu, CEO, and Shri Abhijeet Sehgal,
Ex-CEO, coupled with non-submission of the requisite data by
Shri Navin Bangera, CFO, and Shri Omkar Prakash Kulkarni,
Director assumes significance in the context of the nature and
scale of the transactions under investigation. The preliminary
investigation has revealed that the GST evasion could be more
than Rs.1000 crore. In these circumstances, the non-
cooperation of the taxpayer has resulted in serious impediment
to and derailment of the investigation, particularly when the
complete merchant-wise, reseller-wise and transaction-wise
data necessary for tracing the financial transactions and
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determining the precise tax liability has not been furnished.
5.8 The taxpayer has relied on the judgement of Hon’ble
Supreme Court in the case of M/s Radha Krishan Industries vs
the State of Himachal Pradesh. In this regard, I find that the
facts of the case of M/s Radha Krishan Industries are different
and not relevant to the instant case. In the said case, the
attachment ordered vide 28.10.2020 has continued to be in
vogue even after notice dated 18.02.2021 was issued to the
taxрayer under Section 74 of the CGST Act, 2017. Further, in
the said case a provisional attachment order dated 19.01.2019
was earlier issued and withdrawn later on 30.01.2019 and again
the attachment order dated 28.10.2020 was issued on the same
grounds, without any change of circumstances, which
continued to exist even after notice was issued under Section 74
of the CGST Act, 2017. The facts of the said case are
distinguishable from the facts of the instant case as provisional
attachment was done following the guidelines issued by CBIC
and well within the legal frame work of the GST law. In the
facts of the instant case, the investigation is still in progress and
the judgement relied upon by the taxpayer is not applicable to
the facts of the instant issue.
5.9 I therefore find that there exists sufficient material, at this
stage of the investigation, to form a prima facie view that the
bank accounts of the taxpayer have a direct nexus with the
financial transactions under investigation and that continued
provisional attachment of the said accounts is necessary to
protect the interests of direct Government revenue.
5.10 However, HDFC Bank, vide its email dated 02.09.2026
has informed that Account No. 50200062341241 is a regulated
Escrow account maintained as per the RBI’s Payment
Aggregator guidelines. The funds lying in the account represent
merchant settlement amounts payable to various beneficiaries,
including several large PSU/Government-linked merchants.
Due to the current freeze, the customer is unable to process
time-bound merchant settlements, resulting in operational
disruption and potential non-compliance with RBI-prescribed
settlement timelines. Further, vide email dated 03.09.2026,
HDFC bank has submitted that, due to freezing of the Escrow
Account No.50200062341241, several Government
Departments and PSUs were unable to receive settlements,
resulting in operational disruption and potential customer
issues. HDFC Bank requested that settlements in respect of the
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aforesaid Government/PSU entities be permitted. HDFC Bank
has furnished the details of the following Government/PSU
entities in this regard :
i. Indian Railway Catering and Tourism Corporation;
ii. The Institute of Chartered Accountants of India;
iii. HDFC Bank Ltd.;
iv. Tamil Nadu Power Fin and Infrastructure
Development Corporation Ltd.;
v. LIC Housing Finance Ltd.;
vi. Bharat Petroleum Corporation Ltd.;
vii. Rehabilitation Council of India; and
viii. Jorhat Municipal Board.
6. In the present case, the investigation has revealed a large-
scale financial transaction network involving several alleged
fictitious/dummy merchants, routing and layering of funds
allegedly generated through online money gaming activities,
non-submission of material records and preliminary GST
evasion estimated to be more than Rs.1000 crore. Further, the
bank accounts under consideration are themselves being used
for routing the financial transactions under investigation. The
continued non-submission of merchant-wise, reseller-wise and
transaction-wise records has prevented the investigation from
fully establishing the complete trail and quantum of
transactions. Therefore, on the basis of the material presently
available on record, I am satisfied that the statutory
requirement of forming an opinion that provisional attachment
is necessary for protecting the interest of Government revenue
is met in the present case. However, in view of the submissions
made by HDFC Bank regarding the genuineness of several
entities associated with the Escrow Account, as discussed in
Para 5.10 above, I find merit in the contention that the
transactions pertaining to such entities are genuine and are not
liable to remain under attachment. Accordingly, the
transactions pertaining to the said entities are ordered to be
unfreezed."
Therefore, the attachment of the accounts may continue
insofar as it is necessary for protecting the interests of revenue,
while genuine settlements to the specifically identified
Government/PSU entities may be permitted from the Escrow
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Account, subject to the conditions specified in the operative
portion of this order.
ORDER
In view of the foregoing facts and Discussions and in
exercise of the powers conferred under Section 83 of the CGST
Act, 2017 read with Rule 159 of the CGST Rules, 2017 I hereby
order that :
(i) The provisional attachment/debit freeze in respect of the
following bank accounts of M/s Pay Mobileware Private
Limited (PAN: AABCZ3186E) shall continue until further
orders, subject to the provisions of Section 83 of the CGST Act,
2017.
Sl. Bank Account Type of Name of the Branch
No. No account
1 50200062341241 Current-Escrow Santacruz Branch
2 50200038266310 Current Bandra East-Kalanagar
(ii) However, in view of the genuineness of the
Government/PSU/statutory entities identified in the
submissions and considering the operational difficulties arising
from non-settlement of their legitimate dues, the transactions
in respect of the Escrow Account No.50200062341241 is
hereby defreezed to the extent of settlements pertaining to the
following entities:
i. Indian Railway Catering and Tourism Corporation;
ii. The Institute of Chartered Accountants of India;
iii. HDFC Bank Ltd.;
iv. Tamil Nadu Power Fin and Infrastructure
Development Corporation Ltd.;
v. LIC Housing Finance Ltd.;
vi. Bharat Petroleum Corporation Ltd.;
vii. Rehabilitation Council of India; and
viii. Jorhat Municipal Board.
(iii) The aforesaid relaxation shall be restricted strictly to
settlements payable to the above-mentioned entities and shall
not amount to release of provisional attachment and shall
continue to be under debit freeze until further orders.
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(Dr. ARVIND KUMAR)
Additional Director General
DGGI, Hyderabad Zonal Unit”
24. A reading of paragraph 2 of the aforesaid order reveals
th
that in response to DRC-22, the taxpayer, vide emails dated 18
th
August 2026 and letter dated 24 August 2026, requested de-
freezing of the aforesaid bank accounts. Accordingly in
compliance with the principles of natural justice and the
provisions of Rule 159(5) of the CGST Rules, an opportunity of
th
personal hearing was granted on 15 August 2026. Further the
th
order reveals that the personal hearing was conducted on 28
August 2026. The order also records that HDFC Bank vide the
nd
email dated 2 September 2026 informed that the account
maintained with them is a regulated escrow account maintained
as per RBI’s Payment Aggregator guidelines. The funds lying in
the account represent merchant settlement amounts payable to
various beneficiaries, including several large PSU/Government-
linked merchants. It is then pointed out by HDFC Bank that
difficulties were faced as a result of the freeze.
25. Mainly it is the submission of the respondents that since
the petitioner is not cooperating with the investigation, and as
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there is a suspicion about the involvement of the petitioner
beyond their role as a payment aggregator in playing a significant
role in the alleged evasion of GST by an organised online money
gaming syndicate, that the provisional attachment is issued to
protect the interests of the revenue.
26. At this juncture it would be pertinent to bear in mind the
Radha Krishan
dictum of the Hon’ble Supreme Court in
Industries
(supra). Facts stated briefly indicates that the
assessment of GM Powertech was finalised and fake Input Tax
Credit (ITC) was passed on to Radha Krishan Industries. Since the
goods were sold by Radha Krishan Industries using fake ITC to
one Fujikawa Power, the payments due from Fujikawa Power were
attached under Section 83 of the CGST Act. In paragraphs 30, 31
and 33, Their Lordships equated the power under Section 83 of
the CGST Act with Order XXXVIII Rule 5 of the Code of Civil
Procedure, 1908 and referred to the principles laid down in
7
Raman Tech. & Process Engg. Co. and Anr. vs. Solanki Traders .
The Court also referred to the test of a “fly by night operator”.
27. Their Lordships then in the context of requirement of
cogent material observed that in the absence of cogent or credible
7 (2008) 2 SCC 302
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material for the purpose of provisional attachment, the exercise of
power would amount to malice in law. When the opinion is
challenged, the officer must be able to demonstrate the material
on the basis of which the belief was formed. There must be a live
link between the “necessity of attachment” and the “tangible
material” on record. It was further held that the opinion must
reflect the “necessity for attachment” and not merely a prima facie
case on merits. The “necessity for attachment” is to be
distinguished from the exercise of power merely because it is
“expedient or profitable or practicable to attach”. The test laid
down is whether “only” such attachment is necessary to protect
the interests of the revenue. Their Lordships then held that
proportionality is an ingredient of the exercise of the power of
provisional attachment.
28. Learned Senior Advocate for the petitioner placed
reliance on the decision of this Court in Nivara Infradevelopers
8
LLP vs. The Union of India and others in support of the
submission that the material and reasons justifying provisional
attachment must be reflected in the attachment order itself.
9
29. In Armour Security vs. Commissioner , the Hon’ble
nd
8 Writ Petition (L) No.7888 of 2026 decided on 2 April 2026.
9 2025 INSC 982
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Supreme Court has interpreted the phrase “initiated any
proceedings” under Section 6(2)(b) of the CGST Act, to mean only
those proceedings which are quasi-judicial in nature and where a
notice is issued and an order is passed. It is specifically held that a
Section 70 summons inquiry is not covered by the word
“proceedings”. Section 83 of the CGST Act uses the words
“initiation of any proceedings”, which are similar to the words
“initiated any proceedings” under Section 6(2)(b) of the CGST Act.
30. We find that the impugned orders contain only vague
statements which do not show any GST liability of the petitioner.
From the impugned orders and the subsequent partial defreezing
orders and the affidavit-in-reply filed by the respondent No.2, we
are of the opinion that the entire case relates to money laundering
by unnamed third parties and there is not a whisper of any GST
liability of the petitioner. The opinion recorded in the impugned
order is only the following few vague sentences “the Directorate
General of GST Intelligence (DGGI), Hyderabad Zonal Unit, is
investigating a case involving an organised online gaming
syndicate engaged in large-scale financial transactions through
multiple fintech companies and shell entities/merchant
establishments, allegedly used for routing and layering funds
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generated from online gaming activities without payment of the
applicable GST. During the course of investigation, M/s. 1Pay
Mobileware Private Limited has emerged as one of the entities
allegedly involved in routing such funds.”
31. It is therefore apparent that the respondent No.2 has
exercised the powers under Section 83 of the CGST Act as there is
some suspicion of money laundering. There is hardly any material
in the impugned order which reflects the basis on which the
opinion is arrived at. Further, the provisions of Section 83 of the
CGST Act clearly provide that the attachment can be of any
property belonging to the taxable person or any person specified
in sub-section (1A) of Section 122. The order does not record nor
there is any material to indicate that the petitioner is a taxable
person or is a person specified in sub-section (1A) of Section 122,
in which case the exercise of the power under Section 83 of the
CGST Act is contrary to law.
32. The impugned order of attachment does not mention any
details of the specific transactions, the entities involved, the
manner of evasion of GST and most importantly the petitioner’s
role in such evasion. The allegation appears to be that the evasion
of the GST has been done by routing it through a digital platform.
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Considering that the petitioner is the payment aggregator for
several government entities, we are in agreement with the
submission of learned Senior Advocate for the petitioner that the
petitioner is not some “fly by night operator”.
33. The affidavit-in-reply indicates that some 88 merchants
are using the petitioner’s platform and are non-existent and
involved in online money gaming. The petitioner’s customers are
onboarded only after their KYC is done. The names and identities
or the basis details of the transactions of these 88 merchants are
not disclosed in any of the orders or even in the affidavit-in-reply.
34. The affidavit-in-reply rely on the statement of outward
supplies filed by the petitioner itself when its GSTR-1 on the GST
portal reflects the invoice wise details of transactions undertaken
by the petitioner. Admittedly these are merely commission
invoices. Neither the impugned orders of provisional attachment,
nor the partial defreezing orders nor the affidavit-in-reply
mentioned the exact illegality suspected to be committed by these
88 unknown merchants pointing out to the involvement of the
petitioner’s role in evasion of GST. It is further material to note
that so far as the monies in the escrow account are concerned, the
same are impressed with a trust and not “property of the
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petitioner” and hence cannot be attached under Section 83 of the
CGST Act. The said monies in the escrow account do not belong to
the petitioner.
35. The Delhi High Court in Zhudao Infotech Private Limited
10
vs. Principal Additional Director General and Another has held
that attachment of bank accounts by DGGI of a payment
aggregator, wherein the allegation was that the payment
aggregator was “supporting” illegal gambling products and that
the merchants had made a web of illegal gaming entities, when the
payment aggregator itself is not being held liable to pay on any
transaction, its accounts cannot be attached to recover liabilities
which may become due in the hands of third parties.
36. We find that the affidavit-in-reply proceeds on the basis
of alleged non-cooperation of the petitioner in the investigation.
The petitioner has indicated its willing to cooperate in so far as it
pertains to 88 entities referred to in the affidavit-in-reply.
37. Further, the orders of provisional attachment cannot be
justified through affidavits-in-reply. Neither the impugned orders
nor the affidavit-in-reply contain any “opinion”. The same is
indicative of only official inquiry. There is no material on record to
10 2023 SCC OnLine Del 3209
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show that there is any GST liability on the petitioner.
38. It is pertinent to note that learned counsel for the
respondents submitted that the Additional Director General has
recorded reasons to believe in the file before ordering attachment
of bank accounts of the petitioner. The categorical stand has been
taken that the reasons are now stated in the reply filed in the writ
th th
petition and also in the orders dated 4 September 2026 and 18
September 2026. It is significant to note the relevant observations
Radha Krishan Industries
in the summary of findings in (supra).
Paragraphs 76.4, 76.5, 76.6 and 76.7 needs to be extracted which
read thus :-
“76.4. The power to order a provisional attachment of the
property of the taxable person including a bank account is
draconian in nature and the conditions which are prescribed by
the statute for a valid exercise of the power must be strictly
fulfilled.
76.5. The exercise of the power for ordering a provisional
attachment must be preceded by the formation of an opinion by
the Commissioner that it is necessary so to do for the purpose
of protecting the interest of the government revenue. Before
ordering a provisional attachment the Commissioner must
form an opinion on the basis of tangible material that the
assessee is likely to defeat the demand, if any, and that
therefore, it is necessary so to do for the purpose of protecting
the interest of the government revenue.
76.6. The expression “necessary so to do for protecting the
government revenue” implicates that the interests of the
government revenue cannot be protected without ordering a
provisional attachment.
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76.7. The formation of an opinion by the Commissioner
under Section 83(1) must be based on tangible material bearing
on the necessity of ordering a provisional attachment for the
purpose of protecting the interest the government revenue.”
39. Bearing in mind the aforesaid principles and in the facts
of the present case, we are of the opinion that there was a clear
non-application of mind by the Joint Commissioner to the
provisions of Section 83 of the CGST Act, rendering the
provisional attachment illegal. The opinion is based completely on
suspicion and there is a complete absence of cogent and credible
material for exercising the power under Section 83 of the CGST
Act of provisional attachment in the present case. Based on the
material on record we have no hesitation in forming an opinion
Radha Krishan Industries
that the test laid down in (supra) are
not at all satisfied in the present case. The writ petition is
therefore allowed in terms of prayer clauses (a) and (g).
40. No order as to costs.
(SANDESH D. PATIL, J.) (M. S. KARNIK, J.)
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