DGGI Busts Illegal Pan Masala Network in UP

• ₹185 crore GST, HSNS cess and excise duty evasion detected
• 27 illegal pouch-packing machines seized across six premises
• 15.5 lakh pouches of pan masala, gutkha and tobacco products confiscated
• Proprietor arrested; nationwide DGGI crackdown uncovers ₹668 crore evasion since February 2026

GG News Bureau
Chitrakoot, 21st Aug: The Directorate General of GST Intelligence (DGGI) has uncovered a major clandestine pan masala and tobacco manufacturing network in Uttar Pradesh, detecting tax, cess and excise duty evasion worth around ₹185 crore during coordinated raids across Chitrakoot and Banda districts.

Acting on specific intelligence, the DGGI’s Lucknow Zonal Unit conducted simultaneous searches at six premises linked to a manufacturing firm and a trading entity on the night of August 18. Officials discovered an extensive illegal production network operating through unregistered facilities equipped with undeclared machinery.

During the operation, officers seized 27 undeclared pouch-packing machines, including six for scented jarda, nine for pan masala and 12 for dohara/desi gutkha. Additional machinery used for mixing, areca nut crushing and drying was also recovered.

Authorities confiscated 15,50,922 pouches of finished products, including pan masala, chewing tobacco, scented jarda and sugandhit supari. They also seized large quantities of raw materials and packaging supplies, including 32.9 metric tonnes of areca nut, 2.8 metric tonnes of tobacco, 8.4 metric tonnes of packing material, along with katha powder, glycerine, essence and unpacked pan masala.

According to the DGGI, evidence indicates that the manufacturers used undeclared machinery and unregistered premises to produce and clear goods without paying applicable Goods and Services Tax (GST), Health Security and National Security (HSNS) Cess and Central Excise duty.

The proprietor of the manufacturing unit was arrested on August 19 under provisions of the HSNS Cess Act, 2025, and the Central Excise Act, 1944. He was produced before the Special Chief Judicial Magistrate (Customs), Lucknow, who remanded him to judicial custody. The investigation is continuing, with officials expecting further recoveries.

The capacity-based taxation regime for pan masala and tobacco products came into force on February 1, 2026. Under the HSNS Cess Act, 2025, monthly cess on pan masala is determined based on the number, type and capacity of pouch-packing machines installed, while similar provisions apply to chewing tobacco, jarda and gutkha under the Central Excise Act.

The DGGI said it has intensified intelligence-driven enforcement using data analytics and coordinated field operations to curb tax evasion in the sector. Since the new regime came into effect, DGGI formations across the country have registered 27 cases, detecting ₹668 crore in duty, tax and cess evasion. Authorities have also seized 131 pouch-packing machines, arrested 17 individuals, and secured ₹11.7 crore in voluntary payments during ongoing investigations.