1. Title of the Case
| Case Title | 1Pay Mobileware Private Limited v. Union of India & Others |
| Case Number | Writ Petition No. 4586 of 2026; Neutral Citation 2026:BHC-OS:22667-DB; CNR No. HCBM020310962026 |
| Court and Bench | High Court of Judicature at Bombay, Ordinary Original Civil Jurisdiction (Division Bench); Coram: M. S. Karnik and Sandesh D. Patil, JJ. (Judgment per M. S. Karnik, J.) |
| Date of Order | 16 October 2026 |
| Relevant Provisions | Sections 6(2)(b), 67, 70, 83, 122(1) and 122(1A) of the CGST Act, 2017; Rule 159 (including Rule 159(5)) of the CGST Rules, 2017; FORM GST DRC-22, DRC-22A and DRC-23; CBIC Circular dated 23 February 2021 (relied upon by the Revenue); Article 226 of the Constitution of India |
2. Summary of the Judgment
Facts of the Case: The petitioner, an RBI-authorised online and offline payment aggregator, had its Kurla (West) premises sealed by DGGI, Hyderabad Zonal Unit on 10 August 2026 (para 3). Its HDFC current and escrow accounts and an ICICI current account were provisionally attached under Section 83 on or around that date, followed by Kotak Mahindra and IDFC Bank accounts on 24 and 28 August 2026 (paras 4 to 6 and 20). DGGI suspected that the petitioner was assisting an organised online money gaming syndicate to evade GST, citing locked premises, an empty server and non-furnishing of documents (paras 2 and 9 to 11). Objections under Rule 159(5) were disposed of by orders dated 4 and 18 September 2026, which permitted settlements to specified Government and PSU merchants but otherwise continued the freeze (paras 7, 12 and 23).
Issues for Determination: Whether the attachment of the petitioner’s current and RBI-mandated escrow accounts was without jurisdiction under Section 83 and contrary to Radha Krishan Industries v. State of Himachal Pradesh, (2021) 6 SCC 771 (para 20).
Findings and Observations of the Court: The Court found that the impugned orders contained only vague statements and that the case concerned alleged money laundering by unnamed third parties, with no indication of any GST liability of the petitioner (paras 21 and 30). Nothing recorded that the petitioner was a taxable person or a person specified in Section 122(1A) (para 31). The orders disclosed no specific transactions, entities, manner of evasion or role of the petitioner; the 88 allegedly non-existent merchants were not identified, and the GSTR-1 relied upon reflected only commission invoices (paras 32 to 34). Monies in the escrow account are impressed with a trust and are not the petitioner’s property (para 34). Following Zhudao Infotech (Delhi High Court), a payment aggregator’s accounts cannot be attached for liabilities of third parties (para 35), and attachment orders cannot be justified through affidavits-in-reply (para 37).
Verdict and Basis of the Judgment: Applying paragraphs 76.4 to 76.7 of Radha Krishan Industries, the Court held that there was clear non-application of mind, the opinion rested wholly on suspicion and cogent material was absent. The petition was allowed in terms of prayers (a) and (g), setting aside the provisional attachments and the partial defreezing orders to the extent they continued the attachment, with no order as to costs (paras 38 to 40).
Analysis of the Judgment: The ruling confirms that Section 83 protects revenue against a demonstrable risk and is not a tool to compel cooperation. Locked premises or an empty server cannot substitute for tangible material on the petitioner’s own liability, and treating escrow balances as trust money limits attachment of intermediary accounts.
Legal Takeaway: Payment aggregators and other intermediaries facing a debit freeze should file objections in FORM GST DRC-22A, stress the absence of any recorded liability or Section 122(1A) finding, and assert the trust character of escrow funds; reasons must appear in the attachment order itself.
3. Tabular Summary
| Sl. No. | Case Title | Case No. / Citation | Court / Bench | Date of Order | Facts & Issue | Verdict & Basis of Judgment | Key Legal Takeaway |
|---|---|---|---|---|---|---|---|
| 1 | 1Pay Mobileware Pvt. Ltd. v. Union of India & Ors. | WP No. 4586 of 2026; 2026:BHC-OS:22667-DB | Bombay High Court (DB): M. S. Karnik & Sandesh D. Patil, JJ. | 16 October 2026 | DGGI froze the current and RBI-mandated escrow accounts of a payment aggregator under Section 83 on suspicion of aiding GST evasion by an online money gaming syndicate. Issue: whether the attachment met Section 83 and Radha Krishan Industries. | Allowed. Orders vague; no GST liability or Section 122(1A) status of petitioner shown; escrow monies held in trust; reasons cannot be supplied by affidavit. Attachments and partial defreezing orders quashed. | Section 83 needs tangible material of the person’s own liability and necessity of attachment; suspicion or non-cooperation is not enough, and escrow funds of a payment aggregator are not its property. |
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