Mohsin Shabbir Khan. Vs State of Telangana (Telangana High Court)
₹12 Crore Cess Evasion: Telangana HC Grants Bail to Accused in Clandestine Pan Masala Manufacturing Ring
Material Facts
The petitioner sought regular bail in a case registered by the Superintendent of Central Tax Anti-Evasion Section, Hyderabad GST Commissionerate for offences under Sections 18(1)(a), 18(1)(b) and 18(1)(c) read with Section 19(1) of the HSNS Cess Act, 2025. Based on searches conducted on 09.05.2026, the prosecution alleged that four packing machines, “Kalakaar” branded Pan Masala, raw materials and packing materials were seized. It was alleged that the petitioner, along with others, clandestinely manufactured and cleared Pan Masala through undeclared packing machines without registration under the HSNS Cess Act, 2025 and without payment of HSNS Cess, resulting in an estimated evasion of about ₹12 crore. The petitioner was arrested on 17.06.2026.
Parties’ Submissions
The petitioner submitted that the alleged offences were punishable with imprisonment of less than five years and that he was arrested without service of notice under Section 35(3) of the BNSS. It was also submitted that the HSNS Cess Act is a new enactment.
The State opposed the bail application, contending that the petitioner had played a major role in the alleged offence and that another accused, described as the kingpin, was absconding and had filed an anticipatory bail application.
