DGGI busts ₹185 crore pan masala tax evasion network in Uttar Pradesh
Synopsis
DGGI's midnight raids on six premises in UP's Chitrakoot and Banda districts have cracked open a fully covert pan masala and gutkha manufacturing network — 27 undeclared machines, over 15 lakh finished pouches, and ₹185 crore in evaded GST, cess and excise duty. The proprietor is now in judicial custody, and investigators say more recoveries are likely.
Key Takeaways
DGGI Lucknow Zonal Unit raided six premises in Chitrakoot and Banda, Uttar Pradesh on 18 August .
27 undeclared pouch-packing machines were found, producing pan masala, scented jarda and desi gutkha off the books.
Authorities seized 15,50,922 pouches of finished products and significant quantities of raw and packaging materials.
Tax evasion of approximately ₹185 crore — spanning GST, HSNS Cess and Central Excise duty — has been detected so far.
The manufacturing firm's proprietor was arrested on 19 August and remanded to judicial custody by the Special CJM (Customs), Lucknow.
Investigation is continuing and further recoveries are expected, officials said.
The Directorate General of GST Intelligence (DGGI) has dismantled a clandestine manufacturing network producing pan masala, scented jarda and gutkha across six premises in Uttar Pradesh's Chitrakoot and Banda districts, with tax evasion of approximately ₹185 crore detected so far. Acting on specific intelligence, officers from the DGGI Lucknow Zonal Unit launched coordinated midnight raids on 18 August, targeting premises linked to two firms — one engaged in manufacturing and the other in trading.
What the Raids Uncovered
Searches revealed 27 undeclared pouch-packing machines operating entirely off the books — six dedicated to scented jarda, nine to pan masala, and 12 to dohara/desi gutkha. Mixing, areca nut crushing and drying equipment were also found on the premises, indicating a fully integrated, covert production setup.
Authorities seized 15,50,922 pouches of finished products, including pan masala, chewing tobacco, scented jarda and sugandhit supari. Raw and packaging material recoveries included 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 and 256 kg of unpacked pan masala.
Scale of Tax Evasion
According to the Ministry of Finance, the detected evasion covers Goods and Services Tax (GST), Health Security and National Security (HSNS) Cess and Central Excise duty, collectively amounting to roughly ₹185 crore. Preliminary evidence suggests goods were being cleared without payment of any applicable taxes, cess or duties — routed through unregistered premises using undeclared machinery, officials said.
Arrest and Legal Action
The proprietor of the manufacturing firm was found prima facie responsible for organising and managing the clandestine operation and was arrested on 19 August under provisions of the HSNS Cess Act, 2025 and the Central Excise Act, 1944. He was subsequently produced before the Special Chief Judicial Magistrate (Customs), Lucknow, who remanded him to judicial custody.
What Comes Next
The investigation is ongoing and officials have indicated that further recoveries are expected. This bust is part of a broader DGGI crackdown on illicit tobacco and pan masala supply chains, which have long been flagged by revenue authorities for systematic GST and excise evasion. The scale of unregistered machinery and finished stock seized suggests the network had been operating for a considerable period before detection.
Point of View
Not a ceiling — the DGGI itself says further recoveries are expected, which means the actual evasion could be substantially higher. What this bust exposes is structural: 27 machines running unregistered across six premises in two districts is not a small-time operation; it points to a supply chain with packaging suppliers, distributors and likely retail reach that investigators have not yet fully mapped. The tobacco and pan masala sector has been a perennial blind spot for indirect tax enforcement, partly because the product moves through informal retail and partly because cess structures — now codified under the HSNS Cess Act, 2025 — are relatively new and enforcement capacity is still catching up. The real test is whether this arrest leads to the wider network or ends at the proprietor.
NationPress
21 Aug 2026
Frequently Asked Questions
What did the DGGI uncover in Uttar Pradesh?
The DGGI uncovered a clandestine pan masala, scented jarda and gutkha manufacturing operation spread across six premises in Chitrakoot and Banda districts of Uttar Pradesh. Raids on 18 August revealed 27 undeclared packing machines, over 15 lakh finished pouches and large quantities of raw materials, with tax evasion of approximately ₹185 crore detected.
How much tax evasion has been detected in the DGGI pan masala bust?
Evasion of approximately ₹185 crore has been detected so far, covering GST, Health Security and National Security (HSNS) Cess and Central Excise duty. Officials have indicated the figure may rise as the investigation continues.
Who was arrested in the DGGI pan masala raid?
The proprietor of the manufacturing firm was arrested on 19 August for allegedly organising and managing the clandestine manufacturing and clearance activities. He was produced before the Special Chief Judicial Magistrate (Customs) in Lucknow and remanded to judicial custody.
Under which laws was the accused arrested?
The proprietor was arrested under provisions of the HSNS Cess Act, 2025 and the Central Excise Act, 1944 — the two statutes governing cess and excise liability on tobacco and related products.
What materials were seized during the DGGI raids?
Seized items included 15,50,922 pouches of finished products, 32.9 metric tonnes of areca nut, 2.8 metric tonnes of tobacco, 8.4 metric tonnes of packaging material, 470 kg of katha powder, 850 kg of glycerine, 545 kg of essence and 256 kg of unpacked pan masala, along with 27 undeclared pouch-packing machines.
