A major alleged tax evasion case linked to the manufacture and trade of pan masala has surfaced in Uttar Pradesh, where authorities accused individuals associated with a firm of evading approximately ₹29.12 crore in Health Security/National Security Cess under the provisions of the HSNS Act, 2025. 

The prosecution alleged that individuals linked with Nuish Forever were involved in the manufacture of “Dhan Shri Pan Masala” and “007 Tobacco” and in carrying out trade activities relating to notified goods without obtaining the required registration and without payment of the applicable cess. The authorities claimed that such activities constituted violations of the provisions of the Health Security and National Security Cess legislation.

SPP Lakshay Kumar Singh on behalf of the department alleged that the acts of the accused resulted in an estimated cess evasion of approximately ₹29.12 crore. The amount was reportedly computed on the basis of goods recovered during searches and on the basis of calculations made under Schedule II of the Health Security/National Security Cess framework.

During the proceedings, the investigating agency sought a 14-day judicial remand of the accused persons. The prosecution submitted that searches conducted at the premises led to the seizure of machinery, finished products, raw materials, and relevant records. Authorities also stated that statements of witnesses and the firm’s accountant had been collected during the investigation and placed on record.

The defence, however, opposed the prosecution’s request and argued that no written objection or material had been filed justifying prolonged detention. It was also argued that machinery found at the premises was allegedly not operational and remained shut, and therefore the allegations of ongoing manufacturing activities were disputed. The defence further contended that the accused had allegedly been falsely implicated by the department.

The order records that during searches conducted on May 13, 2026, authorities allegedly recovered two machines and certain quantities of Dhan Shri Pan Masala pouches from the premises. The prosecution relied on these recoveries to support its allegation that production and trading activities involving notified goods were being carried out without statutory compliance.

The court noted that the allegations involved an estimated tax evasion of approximately ₹29.12 crore and observed that the matter related to an economic offence of a serious nature. Taking note of the material placed before it, including seizure records, statements and other evidence produced during the investigation, the court observed that a prima facie case appeared to exist under Sections 18(1)(a), 18(1)(b), 18(1)(c) and 19(1)(a) of the HSNS Act, 2025.

Consequently, the court ordered judicial custody of the accused until May 25, 2026, and directed the investigating officer to place the technical report and relevant records before the court on the next date of hearing.

The matter remains under investigation and further proceedings are expected after submission of additional materials by the investigating agency.

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