Karnataka high court sets aside central cess on pan masala products under Health Security Act

Karnataka High Court struck down a central cess on pan masala products under the Health Security and National Security Cess Act, 2025.

The cess was based on installed machine capacity, not actual production, which the court deemed unreasonable, vague, and unconstitutional.

Justice M Nagaprasanna upheld the Union government's power to levy cess but found the methodology arbitrary due to unequal burden on manufacturers.

The court allowed petitions by Dhariwal Industries and other pan masala manufacturers challenging the February 2026 act.

The decision does not bar the Union government from enacting a new levy consistent with the judgment's observations.