The Special Chief Judicial Magistrate, Meerut, has rejected the bail application of Kumar Manish, CEO of payment aggregator SabPaisa in a GST evasion case related to online gaming.

In an order dated May 1, the court observed that the allegations against Manish pointed to a "serious economic offence" and said releasing the accused on bail would not be "justified or reasonable" given the nature of the evidence and the ongoing investigation. The court order suggests the matter goes beyond a simple compliance failure.

Manish was arrested on April 17, 2026 by the Directorate General of GST Intelligence (DGGI), Ghaziabad Unit, under multiple provisions of the CGST Act, 2017. The GST authorities accused him of facilitating transactions for dozens of allegedly fake online gaming entities that collectively evaded hundreds of crores in GST.

As per the DGGI investigation, around 47 online gaming-linked entities processed transactions worth nearly Rs 1,644.96 crore through the payment gateway of SabPaisa, which is operated by SRS Live Technologies Pvt Ltd.

These entities paid 18% GST – instead of paying the applicable 28% on the full face value of transactions, resulting in an alleged tax liability of roughly Rs 460 crore.

The DGGI has alleged that many of these companies existed only on paper, operated through fake addresses, and used dummy directors. Investigators further claimed that the payment flows were structured in a manner designed to suppress actual taxable turnover.

According to the DGGI submissions, SabPaisa – which is operated by SRS Live Technologies Pvt Ltd – holds an RBI Payment Aggregator (PA) licence, placing it in the same regulatory category as Paytm, PhonePe, and Razorpay. That licence comes with strict obligations, including mandatory Contact Point Verification (CPV) of merchants, escrow account usage for settlements, and a clear risk-categorisation framework.

SabPaisa allegedly continued onboarding and facilitating these entities despite internal classification of several merchants as "high-risk". Also, some merchants were "deliberately" downgraded from 'red' to 'yellow' risk categories, enabling them to continue operating on the platform.

The court cited statements recorded during the probe, including those from officials associated with merchant verification vendor Tasdeek Solutions Pvt Ltd, which allegedly pointed toward manipulation in the verification process.

Manish's lawyers, however, alleged fraud by its KYC vendor Tasdeek, stating that the vendor improperly onboarded merchants.

The DGGI investigation also noted SabPaisa settled over Rs 75 crore to these merchants through its current bank account rather than the mandatory escrow account in a direct violation of the RBI policy.

While Manish denied any relationship with the gaming companies, investigators found that he had received over Rs 3 crore from some of these same companies into a separate entity, Forty-Two Parks Technologies LLP.

He, however, argued that this was a loan and security deposit.

Manish's lawyers had argued that SabPaisa was merely a technical intermediary with no role in determining merchants' business nature. They pointed out that the company had self-identified suspicious transactions and begun blocking merchants as early as July 2025, freezing Rs 24.95 crore of merchant funds before any DGGI raid.

But the prosecution countered that Manish's action of blocking suspicious accounts was merely a show action taken after ED raids. It was argued that such fraud could not have taken place without the knowledge and collusion of the management

Manish's lawyers argued that in economic offences like tax evasion, arrest should be the last resort.

Manish has re-applied for his bail. The next hearing is now scheduled on May 14, 2026.

If a source from the company is to be believed than Kumar Manish decided to tender his resignation from the position of CEO and the board of directors, but SabPaisa refused to accept his resignation. Manish owns 47.5% in SabPaisa, and Forty-Two Parks Technologies LLP owns 3.7%, as per Tracxn.

This case is part of a broader DGGI crackdown on the payments companies facilitating online gaming transactions. The DGGI's probe into banned online gaming has already led to multiple arrests across sectors, including Fino Payments Bank MD and CEO.