Karnataka High Court strikes down Health Security se National Security Cess Act, 2025
The Karnataka High Court has struck down the Health Security se National Security Cess Act, 2025, ruling that the method of taxing pan masala manufacturers based on machine capacity is unconstitutional. The court found the tax structure arbitrary and in violation of Article 14.
Why it matters
This ruling sets a legal precedent for how the government can levy production-based taxes on manufacturing machinery.
The High Court of Karnataka has struck down the Health Security se National Security Cess Act, 2025, and the associated Rules, holding that the method of levying cess on pan masala manufacturers based on the assumed production capacity of machines, rather than actual output, is unconstitutional and violates Article 14 of the Constitution of India.
While upholding the Parliament’s legislative competence to impose such a cess, the Court granted liberty to the Union government to enact fresh legislation to levy cess in conformity with the constitutional principles outlined in the judgement.
Justice M. Nagaprasanna passed the order recently while partly allowing the petitions filed by M/s Dhariwal Industries Pvt. Ltd., Bengaluru, and others challenging the Act and the Rules.
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