Hyderabad: The Hyderabad CGST Zone uncovered an estimated Rs 160 crore in pan masala tax evasion after busting an alleged clandestine manufacturing unit on the city outskirts.
CGST officers searched the tin-shed facility on August 20 after receiving specific intelligence about its operations. During the search, officials detected 40 undeclared FFS packing machines at the premises. They also found around 56 workers at the unit.
Officials alleged that the facility manufactured and packed branded and unbranded pan masala. It also allegedly produced scented jarda. The operation led to the seizure of finished products, raw materials, vehicles, machinery and documents.
Pan masala tax evasion probe leads to major seizure
CGST officers seized about 5,500 kg of finished products from the premises. In addition, they found consignments ready for dispatch. Officials valued those consignments at Rs 76 lakh.
The search also yielded 2,015 kg of pan masala mixture and 810 kg of tobacco. Moreover, officers seized two vehicles along with packing material and machinery. They also recovered documents linked to the alleged clandestine operations.
The CGST Zone estimated the duty and cess evasion at around Rs 160 crore. According to officials, the undeclared packing machines formed part of the manufacturing operation detected during the search.
The presence of about 56 workers also indicated the scale at which the unit allegedly operated. Officials arrested the key person who allegedly managed the clandestine operation on August 21.
The Special Judge for Economic Offences in Hyderabad subsequently remanded the accused to 14 days of judicial custody. Meanwhile, the Hyderabad CGST Zone said it had intensified intelligence-based enforcement in the pan masala and tobacco sector.
The stepped-up action followed the introduction of a capacity-based cess and taxation regime from February 1, 2026. Officials said the enforcement strategy aimed to curb tax evasion in the sector.
The latest operation uncovered both branded and unbranded products, besides scented jarda, according to the CGST Zone.
Authorities also seized materials used for manufacturing and packaging during the operation. The pan masala tax evasion detected in the case was estimated at Rs 160 crore in duty and cess.