A special court in Visakhapatnam on Tuesday remanded two senior functionaries of Bengaluru-based Neokred Technologies Private Ltd to 14 days of judicial custody in a GST evasion case linked to alleged online betting and gaming transactions.
Investigators informed the court that the company had allegedly played a central role in routing funds for shell entities used to collect money from gaming platforms without complying with tax regulations.
The special judge for economic offences-cum-IV additional district and sessions judge, Visakhapatnam, remanded Tarun Suresh Nazare, 33, of Bengaluru, and Rohith Reji, 30, of Pathanamthitta (Kerala), to judicial custody until May 4. Both have been lodged in Visakhapatnam Central Prison.
In its remand report, the Directorate General of GST Intelligence (DGGI), Visakhapatnam unit, stated that the investigation began into an organised syndicate allegedly operating illegal online gaming websites with support from associated fintech firms, including payment banks, aggregators, gateways, and third-party technology service providers. Rohith Reji was alleged to be linked to this syndicate.
According to the DGGI, Neokred functioned as a programme manager, master merchant, reseller, and payment gateway provider, onboarding merchant entities, including shell or dummy firms such as Eyebrawn Technologies Private Ltd.
Investigators further alleged that Neokred enabled such entities to obtain UPI IDs through banking partners, including Fino Payments Bank. These IDs were reportedly used to route funds linked to online gaming platforms without GST compliance.
UPI IDs issued in the name of declared merchant activities were allegedly used to collect money from users of platforms such as Teen Patti, Rummy Master, Dragon, and Rummy Online. The DGGI stated that these platforms were operating without GST registration and evading tax liabilities.
The agency alleged that no evidence of supply of goods or services was found in relation to transactions involving Eyebrawn and Neokred, suggesting that a network of shell entities had been created to suppress the actual turnover of online money gaming operations and evade GST, which is levied at 28 per cent on total turnover.
The DGGI said funds amounting to Rs 47 crore were routed through Eyebrawn alone, with an estimated GST evasion of approximately Rs 13 crore. It further alleged that several other shell entities had been onboarded by Neokred across multiple banks offering payment aggregator services.
Searches conducted at Eyebrawn’s premises on April 17 reportedly revealed that the firm was non-functional and had been created solely to route funds from online gaming operations. The DGGI described Neokred as the master merchant that facilitated onboarding with Fino Payments Bank for UPI integration.
The agency also conducted searches at Neokred’s registered premises on April 20 and recorded statements from employees, including the CEO and managing director. Investigators alleged that the officials failed to cooperate and provided evasive responses, including not acknowledging factual details of agreements executed with Eyebrawn and Fino Payments Bank.
As per the agreements, Neokred was required to verify the genuineness of merchants’ businesses and ensure that e-commerce transactions were conducted through declared websites to prevent illegal activities. However, the DGGI alleged that no transactions were taking place through the actual merchant websites. Instead, customer data and UPI transaction trails linked to Eyebrawn indicated that funds originated from online money gaming platforms.
The remand report further stated that Neokred exercised control over merchant onboarding, KYC verification, API integration, and transaction routing systems. The agency alleged either a systematic failure or deliberate omission in conducting due diligence, risk profiling, and monitoring of merchant activity, despite contractual obligations.
The DGGI also referred to the UPI service agreement between Neokred and Fino Payments Bank, noting that Neokred acted as the master merchant and client of the bank, paying 0.2% of the transaction value.
Invoking provisions of the CGST Act, the agency informed the court that the offence is cognisable and non-bailable, punishable with imprisonment of up to five years, along with a fine.
Source from: https://timesofindia.indiatimes.com/city/hyderabad/gst-evasion-probe-two-neokred-execs-sent-to-judicial-custody/articleshow/130427007.cms
