New Delhi | August 21,2026 | SKY LINK TIMES
185 Crore Tax Evasion Unearthed:
The Directorate General of GST Intelligence (DGGI) has uncovered an alleged clandestine manufacturing network involved in the production of pan masala, scented jarda and gutkha across six premises in Uttar Pradesh’s Chitrakoot and Banda districts.
According to the Ministry of Finance, the coordinated searches led to the seizure of machinery, finished products and large quantities of raw materials. Authorities have so far detected alleged evasion of GST, Health Security and National Security (HSNS) Cess and Central Excise duty amounting to around ₹185 crore.
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DGGI Conducts Midnight Searches in UP
Acting on specific intelligence, officers of the DGGI’s Lucknow Zonal Unit conducted coordinated searches beginning around midnight on August 18 at premises linked to two firms.
One of the firms was allegedly involved in manufacturing pan masala and related products, while the other was engaged in trading activities.
During the searches, officials discovered 27 undeclared pouch-packing machines, including six machines used for scented jarda, nine for pan masala and 12 for dohara/desi gutkha.
Authorities also found machinery used for mixing, crushing areca nuts and drying materials.
Over 15.5 Lakh Finished Pouches Seized
The operation resulted in the seizure of approximately 15,50,922 pouches of finished products.
The seized material included pan masala, chewing tobacco, scented jarda and sugandhit supari, according to the Ministry of Finance.
Officials also seized substantial quantities of raw and packaging materials, including:
- 32.9 metric tonnes of areca nut and cut areca nut
- 2.8 metric tonnes of tobacco
- 8.4 metric tonnes of packaging material, pouches and laminates
- 470 kg of katha powder
- 850 kg of glycerine
- 545 kg of essence
- 256 kg of unpacked pan masala
₹185 Crore Tax Evasion Detected
According to the ministry, preliminary evidence indicates that the alleged manufacturing operation was being conducted through a network of unregistered premises using undeclared machinery.
Investigators suspect that finished products were cleared without payment of applicable taxes, cess and duties.
The DGGI has so far detected evasion of GST, HSNS Cess and Central Excise duty estimated at around ₹185 crore.
Officials said the investigation remains underway and that further recoveries and findings are expected.
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Manufacturing Firm’s Proprietor Arrested
The proprietor of the manufacturing firm was allegedly found prima facie responsible for organising and managing the clandestine manufacturing and clearance activities.
He was arrested on August 19 under provisions of the HSNS Cess Act, 2025, and the Central Excise Act, 1944.
The accused was subsequently produced before the Special Chief Judicial Magistrate (Customs), Lucknow, who remanded him to judicial custody.
Investigation Continues
The DGGI’s investigation is continuing to determine the full scale of the alleged manufacturing and tax-evasion network.
Authorities are examining the seized machinery, finished products, raw materials and documents to establish the production and clearance trail and identify other individuals or entities potentially connected with the operation.
The latest action highlights the government’s continued crackdown on clandestine manufacturing and tax evasion in sectors involving highly taxed tobacco and pan masala products.
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