In a significant order concerning alleged clandestine manufacturing and cess evasion under the HSNS Cess Act, 2025, the Chief Judicial Magistrate, Patiala House Courts, New Delhi, granted regular bail to accused Pappu Kumar @ Pappu Yadav, holding that continued incarceration was not justified when the investigation substantially rested on documentary evidence already seized by the authorities. 

The matter arose out of an investigation conducted by the Directorate General of GST Intelligence (DGGI) relating to alleged illegal manufacturing activities involving tobacco and pan masala products. According to the department, searches were conducted on April 29, 2026, at multiple premises allegedly linked with the manufacture of products under the “SNB Gold Pan Masala” brand. During the searches, authorities reportedly found undeclared packaging machines in operation and recovered finished goods being manufactured without proper compliance with the cess provisions. 

The department alleged that the clandestine manufacturing activity resulted in substantial cess evasion. It claimed that violations calculated under the relevant provisions of the HSNS Rules resulted in an estimated evasion running into several crores of rupees. The accused was alleged to be operating machinery at the searched premises and was consequently arrested. 

The prosecution contended that the accused had admitted during investigation that he had been engaged in manufacturing tobacco and pan masala pouches from February 2026 onwards. According to the department, the accused was responsible for operating the manufacturing units and carrying out production activities at multiple locations. 

The department further relied on statements of other witnesses, including employees and machine operators, to support its allegation that illegal manufacturing was being carried out from the premises. It also referred to WhatsApp chats and voice notes allegedly showing operational instructions relating to production and transportation of goods. 

According to the prosecution, the accused had committed offences under Sections 18 and 19 of the HSNS Cess Act, 2025, and his release could potentially hamper the ongoing investigation. 

Counsel appearing for the accused argued that the applicant had been in judicial custody since May 1, 2026, and that all relevant machinery, goods, and documentary records had already been seized by the investigating agency. The defence submitted that there was no requirement for further custodial detention and that the accused had cooperated with the investigation. 

The defence also highlighted that the accused had no criminal antecedents, had deep roots in society, and was unlikely to abscond or tamper with evidence. Importantly, it pointed out that co-accused Nimrat Arora had already been granted bail by the Sessions Court despite being attributed a more significant role in the alleged operation. 

A key aspect of the order was the Court’s consideration of the principle of parity. The prosecution itself had portrayed co-accused Nimrat Arora as the person exercising overall supervision and control over the alleged clandestine manufacturing operation. The department’s case suggested that she was the brand owner of “SNB Gold Pan Masala,” handled day-to-day operations, and allegedly issued operational directions regarding manufacturing, packaging, and transportation of finished goods. 

The Court observed that when a co-accused who is alleged to have exercised greater supervisory control has already been granted bail, that factor becomes relevant while deciding the bail plea of another accused. Relying upon the Supreme Court’s decision in Sagar v. State of Uttar Pradesh (2025), the Court noted that similarly situated accused should ordinarily receive similar treatment unless distinguishing circumstances exist. 

The Court found that the department had failed to point out any distinguishing feature that would justify denying bail to the present applicant despite the grant of bail to the co-accused. 

While acknowledging the seriousness of the allegations and the substantial economic implications involved, the Court emphasized that seriousness alone cannot be the sole ground for denial of bail. Referring to landmark Supreme Court judgments including Sanjay Chandra v. CBI, Dataram Singh v. State of Uttar Pradesh, and P. Chidambaram v. Directorate of Enforcement, the Court reiterated that bail remains the norm and pre-trial detention should not assume a punitive character. 

The Court noted that the accused had remained in judicial custody for over a month. Machinery, goods, and documentary evidence had already been seized. The prosecution case largely rested on documentary evidence and recorded statements. No specific material was produced to demonstrate a risk of tampering with evidence. The accused had no criminal antecedents. The offences alleged carried a maximum punishment of five years’ imprisonment. 

Balancing the gravity of the allegations against the constitutional guarantee of personal liberty under Article 21, the Court concluded that continued incarceration would serve no useful purpose. It therefore granted regular bail to the accused upon furnishing a personal bond of ₹50,000 along with one surety of the like amount. 

The Court imposed several conditions, including the accused shall not commit any similar offence while on bail. He shall not tamper with evidence or influence witnesses. Any change in residential address must be communicated to the Court and Investigating Officer. He must cooperate with the investigation whenever called. He must keep his mobile phone operational and provide the correct number to the Investigating Officer. He must regularly appear before the Court during hearings. He shall not leave the country without prior permission of the Court. 

Case Details

Case Title: DGGI Vs. Pappu Kumar @ Pappu Yadav

Date: 05.06.2026

Counsel For Accused:  R P Singh and Aman Sinha

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