DGGI and CGST bust pan masala units, Rs 345 crore tax evasion detected

The Directorate General of GST Intelligence (DGGI) and the Hyderabad CGST Zone have uncovered separate clandestine pan masala and tobacco manufacturing networks in Uttar Pradesh and Telangana, detecting a combined tax evasion of approximately Rs 345 crore. The DGGI's Lucknow Zonal Unit raided six premises in Chitrakoot and Banda districts of Uttar Pradesh on August 18, seizing 27 undeclared pouch-packing machines and detecting evasion of Rs 185 crore, the finance ministry said. The proprietor was arrested on August 19.

Two days later, on August 20, Hyderabad CGST officials searched a tin-shed facility in Medchal-Malkajgiri district, finding 40 undeclared FFS pouch-packing machines and 56 workers. They seized finished goods valued at Rs 76 lakh and detected estimated evasion of Rs 160 crore. The key person was arrested on August 21 and remanded to judicial custody for 14 days. Both operations targeted capacity-based cess evasion under the Health Security and National Security Cess Act, 2025, which took effect on February 1, 2026.

Hindustan Times reports that since the new cess regime began, DGGI formations have booked 27 cases nationwide involving evasion of Rs 668 crore, seized 131 machines and arrested 17 persons. Voluntary payments of Rs 11.7 crore have been made during investigations, according to the ministry.