DGGI busts illegal pan masala and gutkha units in Chitrakoot and Banda

The DGGI pan masala case: what happened?

Since 1 February 2026, pan masala and tobacco makers pay tax based on how many packing machines they run. Hiding machines is therefore the main way to evade. DGGI is using data and raids to catch it.

• DGGI’s Lucknow Zonal Unit searched six premises in Chitrakoot and Banda from midnight on 18.08.2026 and found 27 undeclared pouch-packing machines (6 for scented jarda, 9 for pan masala, 12 for gutkha) [PIB].
• Evasion of about ₹185 crore was detected [PIB].
• Since 1 February 2026 a capacity-based cess applies to pan masala and central excise to chewing tobacco, jarda and gutkha; nationally DGGI has booked 27 cases and detected ₹668 crore evasion [PIB].

How is the sector taxed now?

• Pan masala: a capacity-based monthly cess under the Health Security se National Security Cess Act, 2025 (HSNS), based on number, type and capacity of packing machines.
• Chewing tobacco, jarda and gutkha: a similar capacity-based central excise levy under the Central Excise Act, 1944.
• Both came into effect on 1 February 2026.
• The proprietor was arrested under Section 26 of the HSNS Cess Act and Section 13 of the Central Excise Act.

What can Prelims ask on the DGGI pan masala case?

• DGGI = Directorate General of GST Intelligence.
• HSNS Cess Act, 2025: capacity-based cess on pan masala.
• Central Excise Act, 1944 still applies to tobacco products.

What should UPPCS aspirants note?

• UP link: Chitrakoot and Banda districts; enforcement under the new capacity-based tax regime.