The Health Security Se National Security Cess Act, 2025
Administered Ministry: Ministry of Finance / Department of Revenue
Section
Section 1 Short title, extent and commencement.
(1) This Act may be called the Health Security se National Security Cess Act, 2025.
(2) It shall come into force on such date1 as the Central Government may, by notification in the Official Gazette, appoint.
(2) It shall come into force on such date1 as the Central Government may, by notification in the Official Gazette, appoint.
1. 1st day of February, 2026, vide notification No. S.O. 6153 (E), dated 31st December, 2025, see Gazette of India, Extraordinary, Part II, sec. 3 (ii).
Section 2 Definitions.
(1) In this Act, unless the context otherwise requires,---
(a) "adjudicating authority" means the concerned proper officer appointed or authorised under the respective provisions to pass orders under this Act after adjudication, but does not include the Board, the revisional authority and the appellate authority;
(b) "appellate authority" means an authority appointed or authorised to hear appeals under section 29;
(c) "Appellate Tribunal" means the Customs, Excise and Service Tax Appellate Tribunal constituted under section 129 of the Customs Act, 1962 (52 of 1962);---
(d) "Board" means the Central Board of Indirect Taxes and Customs constituted under section 3 of the Central Boards of Revenue Act, 1963 (54 of 1963);
(e) "cess" means the Health Security se National Security Cess levied under section 4;
(f) "factory" means any premises, including the precincts thereof, wherein or in any part of which---
(i) the specified goods are manufactured; or
(ii)any manufacturing process connected with the production of the specified goods are being carried on or is ordinarily carried on;
(g) "machine" for the purposes of manufacture or production of the specified goods includes all types of Form, Fill and Seal Machines and Profile Pouch Making Machines, by whatever name called, whether vertical or horizontal, with or without collar, single track or multi-track, and any other type of packing machine used for packing of the specified goods in pouches, tins or other containers;
(h) "manufacture" includes---
(i) any process incidental or ancillary to the completion of the specified goods; and
(ii) the process of packing or repacking of such goods in a pouch or tin or other container or labelling or re-labelling thereof including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the specified goods marketable to the consumer,
whether or not such process is the only process undertaken;
(i) "notification" means a notification published in the Gazette of India and the expression "notify" with its grammatical variation and cognate expressions shall be construed accordingly---
(j) "pan masala" means goods falling under tariff item 2106 90 20 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975);
(k) "prescribed" means prescribed by rules made under this Act.
(l) "proper officer" means any officer of the Central Government entrusted with such powers or assigned with specific functions under the provisions of this Act by the Board;
(m) "process" means any manual, mechanical, electrical, electronic, automated or hybrid operation, or any other activity by which the specified goods are manufactured or produced, whether wholly or in part;
(n) "revisional authority" means an authority appointed or authorised under section 28 for revision of an order of the adjudicating authority;
(o) "Schedule" means a Schedule annexed to this Act;
(p) "specified goods" means the goods as specified in Schedule I to this Act or such other goods as the Central Government may, by notification, specify;
(q) "State" includes a Union territory with Legislature;
(r) "taxable person" shall mean a person referred to in section 3; and
(s) "weight" means the maximum weight of the specified goods that is capable of being packaged in each pouch, tin or other container by the relevant machine or process.
(a) "adjudicating authority" means the concerned proper officer appointed or authorised under the respective provisions to pass orders under this Act after adjudication, but does not include the Board, the revisional authority and the appellate authority;
(b) "appellate authority" means an authority appointed or authorised to hear appeals under section 29;
(c) "Appellate Tribunal" means the Customs, Excise and Service Tax Appellate Tribunal constituted under section 129 of the Customs Act, 1962 (52 of 1962);---
(d) "Board" means the Central Board of Indirect Taxes and Customs constituted under section 3 of the Central Boards of Revenue Act, 1963 (54 of 1963);
(e) "cess" means the Health Security se National Security Cess levied under section 4;
(f) "factory" means any premises, including the precincts thereof, wherein or in any part of which---
(i) the specified goods are manufactured; or
(ii)any manufacturing process connected with the production of the specified goods are being carried on or is ordinarily carried on;
(g) "machine" for the purposes of manufacture or production of the specified goods includes all types of Form, Fill and Seal Machines and Profile Pouch Making Machines, by whatever name called, whether vertical or horizontal, with or without collar, single track or multi-track, and any other type of packing machine used for packing of the specified goods in pouches, tins or other containers;
(h) "manufacture" includes---
(i) any process incidental or ancillary to the completion of the specified goods; and
(ii) the process of packing or repacking of such goods in a pouch or tin or other container or labelling or re-labelling thereof including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the specified goods marketable to the consumer,
whether or not such process is the only process undertaken;
(i) "notification" means a notification published in the Gazette of India and the expression "notify" with its grammatical variation and cognate expressions shall be construed accordingly---
(j) "pan masala" means goods falling under tariff item 2106 90 20 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975);
(k) "prescribed" means prescribed by rules made under this Act.
(l) "proper officer" means any officer of the Central Government entrusted with such powers or assigned with specific functions under the provisions of this Act by the Board;
(m) "process" means any manual, mechanical, electrical, electronic, automated or hybrid operation, or any other activity by which the specified goods are manufactured or produced, whether wholly or in part;
(n) "revisional authority" means an authority appointed or authorised under section 28 for revision of an order of the adjudicating authority;
(o) "Schedule" means a Schedule annexed to this Act;
(p) "specified goods" means the goods as specified in Schedule I to this Act or such other goods as the Central Government may, by notification, specify;
(q) "State" includes a Union territory with Legislature;
(r) "taxable person" shall mean a person referred to in section 3; and
(s) "weight" means the maximum weight of the specified goods that is capable of being packaged in each pouch, tin or other container by the relevant machine or process.
Section 3 Taxable person.
(1) For the purposes of this Act, "taxable person" means any person who owns, possesses, operates, manages, or is otherwise in control of the machine or undertakes any process by which specified goods are manufactured or produced, whether directly or through job-workers, employees, hired labour, or through any other person acting on his behalf under any arrangement.
(2) A person shall be treated as a taxable person under this section irrespective of whether he has opted for, or is availing of, any composition scheme, concessional levy, or any other alternate scheme of taxation applicable to the specified goods, under any law for the time being in force.
(3) For the purposes of this section,---
(a) the ownership, possession, or control over the machine or processes shall be sufficient to constitute a person as a taxable person, irrespective of the actual quantity manufactured;
(b) where a machine or process, is owned, possessed, leased, hired or otherwise placed at the disposal of one or more persons manufacturing or producing the specified goods, every such person shall be regarded as a taxable person; and
(c) where the production or manufacture of the specified goods are divided into stages or processes carried out by different persons, such person undertaking the final process that results in the completion or rendering of the specified goods marketable, shall be deemed to be the taxable person.
(2) A person shall be treated as a taxable person under this section irrespective of whether he has opted for, or is availing of, any composition scheme, concessional levy, or any other alternate scheme of taxation applicable to the specified goods, under any law for the time being in force.
(3) For the purposes of this section,---
(a) the ownership, possession, or control over the machine or processes shall be sufficient to constitute a person as a taxable person, irrespective of the actual quantity manufactured;
(b) where a machine or process, is owned, possessed, leased, hired or otherwise placed at the disposal of one or more persons manufacturing or producing the specified goods, every such person shall be regarded as a taxable person; and
(c) where the production or manufacture of the specified goods are divided into stages or processes carried out by different persons, such person undertaking the final process that results in the completion or rendering of the specified goods marketable, shall be deemed to be the taxable person.
Section 4 Levy and collection of cess.
(1) There shall be levied and collected a cess, to be called Health Security se National Security Cess, from every taxable person, on the machines installed or other processes undertaken by him for the manufacture or production of the specified goods referred to in Schedule I, at the amount specified in Schedule II and computed in the manner provided in section 5.
(2) The cess leviable under sub-section (1) shall be in addition to any other duties or taxes chargeable on the specified goods under any law for the time being in force---
(3) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification, exempt any taxable person or a class of taxable persons, unconditionally or subject to such conditions, from the whole or any part of the cess leviable under this section for such period as may be specified in the said notification.
(2) The cess leviable under sub-section (1) shall be in addition to any other duties or taxes chargeable on the specified goods under any law for the time being in force---
(3) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification, exempt any taxable person or a class of taxable persons, unconditionally or subject to such conditions, from the whole or any part of the cess leviable under this section for such period as may be specified in the said notification.
Section 5 Manner of computation of cess.
(1) The cess referred to in section 4 shall be computed in accordance with the provisions of this section based on the relevant process, speed of the machine or capacity of other processes and the weight of the specified goods packed in pouch, tin or other container, as the case may be, as declared by the taxable person and, where applicable, as verified or calibrated by the proper officer under section 9, and on the amount specified in Schedule II for such combination of process, speed or capacity and weight.
(2) Where the specified goods are manufactured or produced wholly or partly with the aid of a machine, the cess shall be levied and collected from the taxable person---
(a) with reference to the maximum rated speed of the machine measured in number of pouches, tins or containers per minute;
(b) for the corresponding weight of the specified goods packed in a pouch, tin or container;
(c) at the monthly amount of cess specified in column (4) in Table 1 of Schedule II against such rated speed and weight provided therein.
(3) The cess payable under section 4 shall be the aggregate of cess calculated under sub-section (2) for each of the machines installed in a factory of the taxable person and where such taxable person owns, possesses, leases or otherwise controls machines installed in more than one factory, the cess shall be computed separately for each such factory.
(4) Where the specified goods are manufactured or produced by a taxable person wholly by manual process without the aid of a machine, the cess shall be levied and collected from the taxable person for each factory at the monthly amount specified in column (4) in Table 2 of Schedule II, irrespective of the capacity of such manual process or the weight of the specified goods packed in a pouch, tin or container.
(5) For the purposes of sub-section (4), a taxable person shall be deemed to be engaged in the manufacture or production of the specified goods wholly by manual process without the aid of a machine only where no machine capable of performing, assisting, or completing any part of the process of manufacture or production of the specified goods is installed in the factory of the taxable person.
(6) The cess determined under sub-section (2) or sub-section (4) shall be payable for each month or part thereof and shall be subject to such abatement or other conditions, as may be prescribed.
(7) Where any machine or manual process unit remains inoperative for a continuous period of fifteen days or more, the cess computed under this section shall, subject to such conditions, as may be prescribed, be abated proportionately for the period of such non-operation.
(2) Where the specified goods are manufactured or produced wholly or partly with the aid of a machine, the cess shall be levied and collected from the taxable person---
(a) with reference to the maximum rated speed of the machine measured in number of pouches, tins or containers per minute;
(b) for the corresponding weight of the specified goods packed in a pouch, tin or container;
(c) at the monthly amount of cess specified in column (4) in Table 1 of Schedule II against such rated speed and weight provided therein.
(3) The cess payable under section 4 shall be the aggregate of cess calculated under sub-section (2) for each of the machines installed in a factory of the taxable person and where such taxable person owns, possesses, leases or otherwise controls machines installed in more than one factory, the cess shall be computed separately for each such factory.
(4) Where the specified goods are manufactured or produced by a taxable person wholly by manual process without the aid of a machine, the cess shall be levied and collected from the taxable person for each factory at the monthly amount specified in column (4) in Table 2 of Schedule II, irrespective of the capacity of such manual process or the weight of the specified goods packed in a pouch, tin or container.
(5) For the purposes of sub-section (4), a taxable person shall be deemed to be engaged in the manufacture or production of the specified goods wholly by manual process without the aid of a machine only where no machine capable of performing, assisting, or completing any part of the process of manufacture or production of the specified goods is installed in the factory of the taxable person.
(6) The cess determined under sub-section (2) or sub-section (4) shall be payable for each month or part thereof and shall be subject to such abatement or other conditions, as may be prescribed.
(7) Where any machine or manual process unit remains inoperative for a continuous period of fifteen days or more, the cess computed under this section shall, subject to such conditions, as may be prescribed, be abated proportionately for the period of such non-operation.
Section 6 Power of Central Government to increase amount of cess in special circumstances.
(1) Where the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification, direct in respect of such specified goods that the amount of cess specified in column (4) in Table 1 of Schedule II and in column (4) in Table 2 of the said Schedule, shall be increased to such amount, not exceeding twice the amount so specified, for such period as may be specified in the notification.
(2) The provisions of this Act shall apply to the cess, as increased under this section, as they apply to the cess specified in Schedule II.
(2) The provisions of this Act shall apply to the cess, as increased under this section, as they apply to the cess specified in Schedule II.
Section 7 Purpose of levy of cess.
(1) The cess shall be levied for the purposes of meeting expenditure on the national security of India and for public health.
(2) The proceeds of the cess levied under section 4 shall first be credited to the Consolidated Fund of India and the Central Government may, after due appropriation made by Parliament by law in this behalf, utilise such sums of money of the cess for the purposes specified in sub-section (1), as it may consider necessary.
(3) For the purposes of utilisation of the cess, the Central Government may specify such activities, schemes and programmes for national security or, as the case may be, for public health, as may be prescribed.
(2) The proceeds of the cess levied under section 4 shall first be credited to the Consolidated Fund of India and the Central Government may, after due appropriation made by Parliament by law in this behalf, utilise such sums of money of the cess for the purposes specified in sub-section (1), as it may consider necessary.
(3) For the purposes of utilisation of the cess, the Central Government may specify such activities, schemes and programmes for national security or, as the case may be, for public health, as may be prescribed.
Section 8 Registration, cancellation and revocation.
(1) Every taxable person who owns, possesses, leases or otherwise controls a machine installed or a process undertaken in a factory, shall register himself with the jurisdictional proper officer in such manner as may be prescribed.
(2) The proper officer may, either on his own motion or on an application filed by the registered person, or by his legal heirs in case of death of such person, cancel the registration, in such manner and within such period, as may be prescribed, having regard to the circumstances where,---
(a) the business has been discontinued, or transferred fully for any reason including death of the proprietor, or amalgamated with other legal entity, or demerged, or otherwise disposed of; or
(b) there is any change in the constitution of the business; or
(c) the taxable person is no longer liable to be registered under this section.
(3) The proper officer may, after giving a reasonable opportunity of being heard, cancel the registration of a taxable person from such date, as he may deem fit, where,---
(a) a registered person has contravened any of the provisions specified in section 18; or
(b) a registered person has not furnished returns for six consecutive calendar months; or
(c) registration has been obtained by means of fraud, wilful misstatement or suppression of facts.
(4) The cancellation of registration under sub-section (2) or sub-section (3) shall not affect the liability of the person to pay cess and other dues under this Act or to discharge any other obligation under this Act or the rules made thereunder, for any period prior to the date of such cancellation, whether or not such cess and other dues are determined before or after the date of the cancellation.
(5) Subject to such conditions as may be prescribed, any taxable person, whose registration is cancelled by the proper officer on his own motion, may apply to such officer for revocation of cancellation of the registration in such form and manner, as may be prescribed, within a period of thirty days from the date of service of the cancellation order and upon receiving such application, the proper officer may, in such manner and within such period, as may be prescribed, and after giving a reasonable opportunity of being heard, by order, either revoke the cancellation of registration or reject the application.
(2) The proper officer may, either on his own motion or on an application filed by the registered person, or by his legal heirs in case of death of such person, cancel the registration, in such manner and within such period, as may be prescribed, having regard to the circumstances where,---
(a) the business has been discontinued, or transferred fully for any reason including death of the proprietor, or amalgamated with other legal entity, or demerged, or otherwise disposed of; or
(b) there is any change in the constitution of the business; or
(c) the taxable person is no longer liable to be registered under this section.
(3) The proper officer may, after giving a reasonable opportunity of being heard, cancel the registration of a taxable person from such date, as he may deem fit, where,---
(a) a registered person has contravened any of the provisions specified in section 18; or
(b) a registered person has not furnished returns for six consecutive calendar months; or
(c) registration has been obtained by means of fraud, wilful misstatement or suppression of facts.
(4) The cancellation of registration under sub-section (2) or sub-section (3) shall not affect the liability of the person to pay cess and other dues under this Act or to discharge any other obligation under this Act or the rules made thereunder, for any period prior to the date of such cancellation, whether or not such cess and other dues are determined before or after the date of the cancellation.
(5) Subject to such conditions as may be prescribed, any taxable person, whose registration is cancelled by the proper officer on his own motion, may apply to such officer for revocation of cancellation of the registration in such form and manner, as may be prescribed, within a period of thirty days from the date of service of the cancellation order and upon receiving such application, the proper officer may, in such manner and within such period, as may be prescribed, and after giving a reasonable opportunity of being heard, by order, either revoke the cancellation of registration or reject the application.
Section 9 Declaration to be filed by taxable person.
(1) Every taxable person shall, in respect of machine installed or process undertaken in such factory, furnish a self-declaration in such form, manner and within such time, as may be prescribed, containing the particulars of the machines installed or processes undertaken for the manufacture or production of the specified goods, together with the parameters relevant for computation of the cess, including the maximum rated speed, weight of packing, nature of packing and such other technical or operational particulars, as may be prescribed.
(2) Where any parameter relevant for the computation of the cess undergoes any change, the taxable person shall furnish a fresh self-declaration under sub-section (1) within such time, form and manner, as may be prescribed.
(3) In case of installation, addition or commencement of operation of any machine or process, the taxable person shall furnish the self-declaration referred to in sub-section (2) within fifteen days of such installation, addition or commencement.
(4) The declaration in sub-section (1) shall be subject to calibration, verification and confirmation by the proper officer, with the approval of an officer not below the rank of Joint Commissioner, in such form, manner and within such time, as may be prescribed and the parameters so verified and confirmed shall be considered for the computation of cess under section 5.
(5) No calibration, verification or confirmation under sub-section (4) shall be made by the proper officer without giving the taxable person a reasonable opportunity of being heard.
(6) Every taxable person shall comply with such oversight, monitoring or verification mechanisms, whether technological, operational or audit-based, as may be prescribed, to ensure the integrity and accuracy of reporting in relation to the manufacture or production of the specified goods.
(2) Where any parameter relevant for the computation of the cess undergoes any change, the taxable person shall furnish a fresh self-declaration under sub-section (1) within such time, form and manner, as may be prescribed.
(3) In case of installation, addition or commencement of operation of any machine or process, the taxable person shall furnish the self-declaration referred to in sub-section (2) within fifteen days of such installation, addition or commencement.
(4) The declaration in sub-section (1) shall be subject to calibration, verification and confirmation by the proper officer, with the approval of an officer not below the rank of Joint Commissioner, in such form, manner and within such time, as may be prescribed and the parameters so verified and confirmed shall be considered for the computation of cess under section 5.
(5) No calibration, verification or confirmation under sub-section (4) shall be made by the proper officer without giving the taxable person a reasonable opportunity of being heard.
(6) Every taxable person shall comply with such oversight, monitoring or verification mechanisms, whether technological, operational or audit-based, as may be prescribed, to ensure the integrity and accuracy of reporting in relation to the manufacture or production of the specified goods.
Section 10 Payment of cess and returns.
(1) The cess levied under section 4 shall be collected from every taxable person at the beginning of each month, but not later than the 7th day of that month, in such manner as may be prescribed.
(2) Every taxable person shall, for every calendar month or part thereof, self-assess the cess payable under section 4 and furnish a return, in such form, manner, within such time, and subject to such conditions and restrictions, as may be prescribed.
(3) The Board may, for reasons to be recorded in writing, by notification, extend the time limit for furnishing the returns under this section for such class of taxable persons as may be specified therein.
(4) Where any taxable person, after furnishing a return under sub-section (2), discovers any omission or incorrect particulars therein, other than as a result of any action in this behalf by the proper officer, he shall rectify such omission or incorrect particulars in such form and manner, as may be prescribed, subject to payment of interest, if any, under this Act.
(5) Where a taxable person fails to furnish a return under sub-section (2), a notice shall be issued by the proper officer requiring him to furnish such return within fifteen days in such form and manner, as may be prescribed.
(6) No taxable person shall furnish a return for any calendar month after the expiry of a period of two years from the due date for furnishing such return.
(2) Every taxable person shall, for every calendar month or part thereof, self-assess the cess payable under section 4 and furnish a return, in such form, manner, within such time, and subject to such conditions and restrictions, as may be prescribed.
(3) The Board may, for reasons to be recorded in writing, by notification, extend the time limit for furnishing the returns under this section for such class of taxable persons as may be specified therein.
(4) Where any taxable person, after furnishing a return under sub-section (2), discovers any omission or incorrect particulars therein, other than as a result of any action in this behalf by the proper officer, he shall rectify such omission or incorrect particulars in such form and manner, as may be prescribed, subject to payment of interest, if any, under this Act.
(5) Where a taxable person fails to furnish a return under sub-section (2), a notice shall be issued by the proper officer requiring him to furnish such return within fifteen days in such form and manner, as may be prescribed.
(6) No taxable person shall furnish a return for any calendar month after the expiry of a period of two years from the due date for furnishing such return.
Section 11 Scrutiny and assessments.
(1) The proper officer may scrutinise the return and related particulars furnished by the registered taxable person to verify the correctness of the return and inform him of the discrepancies noticed, if any, in such manner, as may be prescribed, and seek his explanation thereto and in case---
(a) the explanation so given is found acceptable, the taxable person shall be informed accordingly and no further action shall be taken in this regard;
(b) no satisfactory explanation is furnished within a period of thirty days of being informed by the proper officer or such further period, as may be permitted by him, or where the taxable person, after accepting the discrepancies, fails to take the corrective measure in his return for the month in which the discrepancy is accepted, the proper officer may initiate appropriate action in accordance with the provisions of this Act.
(2) Where a taxable person fails to furnish the return under section 10, either on his own motion or in response to a notice issued, the proper officer may proceed to assess the liability of cess of the said person to the best of his judgement, taking into account all the relevant material which is available or which he has gathered and issue an assessment order within a period of five years from the end of the month to which the cess not paid relates.
(3) Where a taxable person fails to obtain registration, or whose registration has been cancelled but who was liable to pay cess, the proper officer may proceed to assess the liability of the cess payable by such taxable person to the best of his judgment for the relevant calendar month and issue an assessment order within a period of five years from the end of the month to which the cess not paid relates.
(4) No assessment order shall be passed under sub-section (2) or sub-section (3) by the proper officer without giving the taxable person a reasonable opportunity of being heard.
(a) the explanation so given is found acceptable, the taxable person shall be informed accordingly and no further action shall be taken in this regard;
(b) no satisfactory explanation is furnished within a period of thirty days of being informed by the proper officer or such further period, as may be permitted by him, or where the taxable person, after accepting the discrepancies, fails to take the corrective measure in his return for the month in which the discrepancy is accepted, the proper officer may initiate appropriate action in accordance with the provisions of this Act.
(2) Where a taxable person fails to furnish the return under section 10, either on his own motion or in response to a notice issued, the proper officer may proceed to assess the liability of cess of the said person to the best of his judgement, taking into account all the relevant material which is available or which he has gathered and issue an assessment order within a period of five years from the end of the month to which the cess not paid relates.
(3) Where a taxable person fails to obtain registration, or whose registration has been cancelled but who was liable to pay cess, the proper officer may proceed to assess the liability of the cess payable by such taxable person to the best of his judgment for the relevant calendar month and issue an assessment order within a period of five years from the end of the month to which the cess not paid relates.
(4) No assessment order shall be passed under sub-section (2) or sub-section (3) by the proper officer without giving the taxable person a reasonable opportunity of being heard.
Section 12 Audit.
(1) The proper officer not below the rank of a Commissioner or any other officer authorised by him may, by way of a general or special order, undertake audit of any registered taxable person for such period, at such frequency and in such manner, as may be prescribed.
(2) The officers referred to in sub-section (1) may conduct audit in their office or at the place of business of the registered taxable person.
(3) The registered taxable person shall be informed by way of a notice not less than fifteen working days prior to the conduct of audit in such manner as may be prescribed.
(4) The audit under sub-section (1) shall be completed within a period of three months from the date of commencement of such audit.
(5) Where the proper officer referred to in sub-section (1) is satisfied that the audit in respect of such registered taxable person cannot be completed within the period of three months, he may, for the reasons to be recorded in writing, extend the said period by a further period not exceeding six months.
(6) For the purposes of this sub-section, the expression, "commencement of audit" shall mean the date on which the records and other documents called for by the proper officer, are made available by the registered taxable person or the actual institution of audit at the office of the proper officer or at the place of business of such registered taxable person, whichever is later.
(7) During the course of audit, the proper officer may require the registered taxable person---
(a) to afford him the necessary facility to verify the books of account or other documents as he may require; and
(b) to furnish such information as he may require and render necessary assistance for timely completion of the audit.
(8) On conclusion of audit, the proper officer shall, within thirty days, inform the registered taxable person, whose records are audited, about the findings, his rights and obligations and the reasons for such findings.
(9) Where the audit conducted under sub-section (1) results in detection of cess not paid or short paid or erroneously refunded, the proper officer may initiate action under section 16.
(2) The officers referred to in sub-section (1) may conduct audit in their office or at the place of business of the registered taxable person.
(3) The registered taxable person shall be informed by way of a notice not less than fifteen working days prior to the conduct of audit in such manner as may be prescribed.
(4) The audit under sub-section (1) shall be completed within a period of three months from the date of commencement of such audit.
(5) Where the proper officer referred to in sub-section (1) is satisfied that the audit in respect of such registered taxable person cannot be completed within the period of three months, he may, for the reasons to be recorded in writing, extend the said period by a further period not exceeding six months.
(6) For the purposes of this sub-section, the expression, "commencement of audit" shall mean the date on which the records and other documents called for by the proper officer, are made available by the registered taxable person or the actual institution of audit at the office of the proper officer or at the place of business of such registered taxable person, whichever is later.
(7) During the course of audit, the proper officer may require the registered taxable person---
(a) to afford him the necessary facility to verify the books of account or other documents as he may require; and
(b) to furnish such information as he may require and render necessary assistance for timely completion of the audit.
(8) On conclusion of audit, the proper officer shall, within thirty days, inform the registered taxable person, whose records are audited, about the findings, his rights and obligations and the reasons for such findings.
(9) Where the audit conducted under sub-section (1) results in detection of cess not paid or short paid or erroneously refunded, the proper officer may initiate action under section 16.
Section 13 Power to summon persons to give evidence and produce documents.
(1) The proper officer under this Act shall have power to summon any person whose attendance he considers necessary, either to give evidence or to produce a document or any other thing, in any inquiry in the same manner, as provided in the case of a Civil Court under the provisions of the Code of Civil Procedure, 1908.
(2) Every such inquiry referred to in sub-section (1) shall be deemed to be a "judicial proceeding" within the meaning of section 193 and section 267 of the Bharatiya Nyaya Sanhita, 2023 (45 of 2023).
(2) Every such inquiry referred to in sub-section (1) shall be deemed to be a "judicial proceeding" within the meaning of section 193 and section 267 of the Bharatiya Nyaya Sanhita, 2023 (45 of 2023).
Section 14 Access to business premises.
(1) Any officer under this Act, authorised by the proper officer not below the rank of a Joint Commissioner, shall have access to any place of business of a taxable person to inspect books of account, documents, computers, computer programs, computer software, whether installed in a computer or otherwise, and such other things as he may require and which may be available at such place, for the purposes of carrying out any audit, scrutiny, verification and checks, as may be necessary to safeguard the interest of revenue.
(2) Every person in charge of the place referred to in sub-section (1) shall, on demand, make available to the officer authorised under sub-section (1), or the audit party deputed by the proper officer,---
(a)such records as prepared or maintained by the taxable person and declared to the proper officer in such manner as may be prescribed;
(b) trial balance or its equivalent;
(c) statements of annual financial accounts, duly audited, wherever required;
(d) cost audit report, if any, under section 148 of the Companies Act, 2013 (18 of 2013);
(e) the income-tax audit report, if any, under section 44AB of the Income-tax Act, 1961 (43 of 1961); and
(f) any other relevant record, for the scrutiny by such officer or audit party, within a period not exceeding fifteen working days from the day when such demand is made, or such further period as may be allowed by the said officer or the audit party.
(2) Every person in charge of the place referred to in sub-section (1) shall, on demand, make available to the officer authorised under sub-section (1), or the audit party deputed by the proper officer,---
(a)such records as prepared or maintained by the taxable person and declared to the proper officer in such manner as may be prescribed;
(b) trial balance or its equivalent;
(c) statements of annual financial accounts, duly audited, wherever required;
(d) cost audit report, if any, under section 148 of the Companies Act, 2013 (18 of 2013);
(e) the income-tax audit report, if any, under section 44AB of the Income-tax Act, 1961 (43 of 1961); and
(f) any other relevant record, for the scrutiny by such officer or audit party, within a period not exceeding fifteen working days from the day when such demand is made, or such further period as may be allowed by the said officer or the audit party.
Section 15 Officers to assist proper officers.
(1) All officers of police, railways, customs and those officers engaged in the collection of land revenue, including village officers, officers of the State Governments and Union territory Administrations shall assist the proper officer in the implementation of this Act.
(2) The Central Government may, by notification, empower and require any other class of officers to assist the proper officers in the implementation of this Act when called upon to do so.
(2) The Central Government may, by notification, empower and require any other class of officers to assist the proper officers in the implementation of this Act when called upon to do so.
Section 16 Determination of cess not paid or short paid or erroneously refunded.
(1) Where it appears to the proper officer that any cess has not been paid or short paid or erroneously refunded, he shall serve notice on the taxable person chargeable with cess which has not been so paid or which has been so short paid or to whom the refund has erroneously been made due to any lapse on the part of the taxable person, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 17 and a penalty leviable under the provisions of this Act or the rules made thereunder.
(2) No notice under sub-section (1) shall be issued, if the cess which has not been paid or short paid or erroneously refunded in a financial year is less than one thousand rupees.
(3) The proper officer shall issue the notice under sub-section (1) within a period of twenty-four months from the due date for furnishing of return for the month to which the cess not paid or short paid relates to or within a period of twenty-four months from the date of erroneous refund.
(4) Where a notice has been issued for any calendar month under sub-section (1), the proper officer may serve a statement, containing the details of cess not paid or short paid or erroneously refunded for such periods other than those covered under the said sub-section, on the taxable person chargeable with cess.
(5) The service of the statement referred to in sub-section (4) shall be deemed to be the service of notice on the taxable person under sub-section (1), subject to the condition that the grounds relied upon for such month other than those covered under sub-section (1) are the same as are mentioned in the earlier notice.
(6) In case of the cess which has not been paid or short paid or erroneously refunded, the penalty---
(a) for any reason, other than the reason of fraud or any wilful misstatement or suppression of facts to evade tax, shall be equivalent to ten per cent. of the cess due from such taxable person or ten thousand rupees, whichever is higher;
(b) for the reason of fraud or any wilful misstatement or suppression of facts to evade cess, shall be equivalent to the cess due from such person.
(7) The proper officer shall, after considering the representation, if any, made by the taxable person chargeable with cess, determine the amount of cess, interest and penalty due from such person and issue an order within a period of twelve months from the date of issuance of notice specified in sub-section (4).
(8) Where the proper officer referred to in sub-section (7) is not able to issue the order within the period specified in the said sub-section, another proper officer, not below the rank of Commissioner or an officer, not below the rank of a Joint Commissioner, authorised by him, may, having regard to the reasons to be recorded in writing for delay in issuance of the order under the said sub-section before the expiry of the specified period, extend the said period for a further period not exceeding six months.
(9) Where any cess has not been paid or short paid or erroneously refunded, other than the reason of fraud or any wilful misstatement or suppression of facts to evade cess, the taxable person chargeable with cess may,---
(a) before service of notice under sub-section (1), pay the amount of cess along with interest payable under section 17 of such cess on the basis of his own ascertainment of such cess or the cess as ascertained by the proper officer and inform the proper officer in writing of such payment, who shall, on receipt of such information, not serve any notice under sub-section (1) or the statement under sub-section (4), as the case may be, in respect of the cess so paid or any penalty payable under the provisions of this Act or the rules made thereunder;
(b) pay the said cess along with interest payable under section 17 within a period of sixty days from the date of receipt of show cause notice by him, and on doing so, no penalty shall be payable and all proceedings in respect of the said notice shall be deemed to be concluded.
(10) Where any cess has not been paid or short paid or erroneously refunded by reason of fraud, or any wilful misstatement or suppression of facts to evade cess, the taxable person chargeable with cess, may,---
(a) before service of notice under sub-section (1), pay the amount of cess along with interest payable under section 17 and a penalty equivalent to fifteen per cent. of such cess on the basis of his own ascertainment of such cess, or the cess as ascertained by the proper officer, and inform the proper officer in writing of such payment and the proper officer, on receipt of such information, shall not serve any notice under the said sub-section, in respect of the cess so paid or any penalty payable under the provisions of this Act or the rules made thereunder;
(b) pay the said cess along with interest payable under section 17 and a penalty equivalent to twenty-five per cent. of such cess within a period of sixty days from the date of receipt of the notice, and on doing so, all proceedings in respect of the said notice shall be deemed to be concluded;
(c) pay the cess along with interest payable thereon under section 17 and a penalty equivalent to fifty per cent. of such cess within a period of sixty days of the date of receipt of the order, and on doing so, all proceedings in respect of the said notice shall be deemed to be concluded.
(11) Where the proper officer is of the opinion that the amount paid under clause (a) of sub-section (9) or clause (a) of sub-section (10) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable.
(12) Notwithstanding anything contained in clause (a) or clause (b) of sub-section (9), the penalty under clause (a) of sub-section (6) shall be payable, where any amount of self-assessed tax or any amount collected as cess has not been paid within a period of thirty days from the due date of payment of such cess.
(2) No notice under sub-section (1) shall be issued, if the cess which has not been paid or short paid or erroneously refunded in a financial year is less than one thousand rupees.
(3) The proper officer shall issue the notice under sub-section (1) within a period of twenty-four months from the due date for furnishing of return for the month to which the cess not paid or short paid relates to or within a period of twenty-four months from the date of erroneous refund.
(4) Where a notice has been issued for any calendar month under sub-section (1), the proper officer may serve a statement, containing the details of cess not paid or short paid or erroneously refunded for such periods other than those covered under the said sub-section, on the taxable person chargeable with cess.
(5) The service of the statement referred to in sub-section (4) shall be deemed to be the service of notice on the taxable person under sub-section (1), subject to the condition that the grounds relied upon for such month other than those covered under sub-section (1) are the same as are mentioned in the earlier notice.
(6) In case of the cess which has not been paid or short paid or erroneously refunded, the penalty---
(a) for any reason, other than the reason of fraud or any wilful misstatement or suppression of facts to evade tax, shall be equivalent to ten per cent. of the cess due from such taxable person or ten thousand rupees, whichever is higher;
(b) for the reason of fraud or any wilful misstatement or suppression of facts to evade cess, shall be equivalent to the cess due from such person.
(7) The proper officer shall, after considering the representation, if any, made by the taxable person chargeable with cess, determine the amount of cess, interest and penalty due from such person and issue an order within a period of twelve months from the date of issuance of notice specified in sub-section (4).
(8) Where the proper officer referred to in sub-section (7) is not able to issue the order within the period specified in the said sub-section, another proper officer, not below the rank of Commissioner or an officer, not below the rank of a Joint Commissioner, authorised by him, may, having regard to the reasons to be recorded in writing for delay in issuance of the order under the said sub-section before the expiry of the specified period, extend the said period for a further period not exceeding six months.
(9) Where any cess has not been paid or short paid or erroneously refunded, other than the reason of fraud or any wilful misstatement or suppression of facts to evade cess, the taxable person chargeable with cess may,---
(a) before service of notice under sub-section (1), pay the amount of cess along with interest payable under section 17 of such cess on the basis of his own ascertainment of such cess or the cess as ascertained by the proper officer and inform the proper officer in writing of such payment, who shall, on receipt of such information, not serve any notice under sub-section (1) or the statement under sub-section (4), as the case may be, in respect of the cess so paid or any penalty payable under the provisions of this Act or the rules made thereunder;
(b) pay the said cess along with interest payable under section 17 within a period of sixty days from the date of receipt of show cause notice by him, and on doing so, no penalty shall be payable and all proceedings in respect of the said notice shall be deemed to be concluded.
(10) Where any cess has not been paid or short paid or erroneously refunded by reason of fraud, or any wilful misstatement or suppression of facts to evade cess, the taxable person chargeable with cess, may,---
(a) before service of notice under sub-section (1), pay the amount of cess along with interest payable under section 17 and a penalty equivalent to fifteen per cent. of such cess on the basis of his own ascertainment of such cess, or the cess as ascertained by the proper officer, and inform the proper officer in writing of such payment and the proper officer, on receipt of such information, shall not serve any notice under the said sub-section, in respect of the cess so paid or any penalty payable under the provisions of this Act or the rules made thereunder;
(b) pay the said cess along with interest payable under section 17 and a penalty equivalent to twenty-five per cent. of such cess within a period of sixty days from the date of receipt of the notice, and on doing so, all proceedings in respect of the said notice shall be deemed to be concluded;
(c) pay the cess along with interest payable thereon under section 17 and a penalty equivalent to fifty per cent. of such cess within a period of sixty days of the date of receipt of the order, and on doing so, all proceedings in respect of the said notice shall be deemed to be concluded.
(11) Where the proper officer is of the opinion that the amount paid under clause (a) of sub-section (9) or clause (a) of sub-section (10) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable.
(12) Notwithstanding anything contained in clause (a) or clause (b) of sub-section (9), the penalty under clause (a) of sub-section (6) shall be payable, where any amount of self-assessed tax or any amount collected as cess has not been paid within a period of thirty days from the due date of payment of such cess.
Section 17 Interest payable on delay in payment of cess.
(1) Every person who is liable to pay cess in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the cess or any part thereof to the Central Government within the specified period, shall, for the period for which the cess or any part thereof remains unpaid, pay on his own, interest at the rate of fifteen per cent. Per annum.
(2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed, from the day succeeding the day on which such tax was due to be paid.
(2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed, from the day succeeding the day on which such tax was due to be paid.
Section 18 Penalty for certain contraventions.
(1) Where a taxable person who---
(a) owns, operates *or is in control of any machine or process for the purpose of manufacture or production of the specified goods without declaring to the proper officer under this Act; or
(b) fails to pay the cess levied under section 4 beyond a period of three months from the date on which such payment becomes due under section 10; or
(c) fails to furnish returns as required under section 10 or falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information or declaration or return with an intention to evade payment of cess due under the said section; or
(d) fraudulently obtains refund of cess; or
(e) obstructs or prevents any officer in discharge of his duties under this Act; or
(f) is liable to be registered under this Act but fails to obtain registration; or
(g) fails to furnish information or documents called for by an officer in accordance with the provisions of this Act or the rules made thereunder, or furnishes false information or documents during any proceedings under this Act; or
(h) tampers with, or destroys any material evidence or document; or
(i) disposes of or tampers with any goods that have been seized under this Act,
the proper officer may, after making such inquiry as he deems fit, impose on such taxable person in addition to the cess leviable, a penalty of ten thousand rupees or an amount equivalent to the cess payable or cess sought to be evaded, or the refund claimed fraudulently, whichever is higher.
(2) Any person who aids or abets any of the contraventions specified in clauses (a) to (i) of sub-section (1) shall be liable to a penalty which may extend to one hundred thousand rupees.
(3) Any order imposing any such penalty shall be passed by the proper officer only after giving the taxable person a reasonable opportunity of being heard.
(a) owns, operates *or is in control of any machine or process for the purpose of manufacture or production of the specified goods without declaring to the proper officer under this Act; or
(b) fails to pay the cess levied under section 4 beyond a period of three months from the date on which such payment becomes due under section 10; or
(c) fails to furnish returns as required under section 10 or falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information or declaration or return with an intention to evade payment of cess due under the said section; or
(d) fraudulently obtains refund of cess; or
(e) obstructs or prevents any officer in discharge of his duties under this Act; or
(f) is liable to be registered under this Act but fails to obtain registration; or
(g) fails to furnish information or documents called for by an officer in accordance with the provisions of this Act or the rules made thereunder, or furnishes false information or documents during any proceedings under this Act; or
(h) tampers with, or destroys any material evidence or document; or
(i) disposes of or tampers with any goods that have been seized under this Act,
the proper officer may, after making such inquiry as he deems fit, impose on such taxable person in addition to the cess leviable, a penalty of ten thousand rupees or an amount equivalent to the cess payable or cess sought to be evaded, or the refund claimed fraudulently, whichever is higher.
(2) Any person who aids or abets any of the contraventions specified in clauses (a) to (i) of sub-section (1) shall be liable to a penalty which may extend to one hundred thousand rupees.
(3) Any order imposing any such penalty shall be passed by the proper officer only after giving the taxable person a reasonable opportunity of being heard.
* CORRIGENDA dated 16th December, 2025.
Section 19 Punishment for certain contraventions.
(1) Whoever commits or causes to commit and retains any benefit arising out of contraventions specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of section 18 shall be punishable in cases where the amount of cess evaded or the amount of refund wrongly taken---
(a) exceeds five hundred lakh rupees, with imprisonment for a term which may extend to five years or with fine, or with both; or
(b) exceeds two hundred lakh rupees but does not exceed five hundred lakh rupees, with imprisonment for a term which may extend to three years or with fine, or with both; or
(c) exceeds one hundred lakh rupees but does not exceed two hundred lakh rupees, with imprisonment for a term which may extend to one year or with fine, or with both.
(2) Whoever commits or causes to commit and retains any benefit arising out of contraventions specified in clause (f) or clause (i) of sub-section (1) of section 18, or abets the commission of an offence specified in the said sub-section, shall be punishable with imprisonment for a term which may extend to six months or with fine, or with both.
(3) Whoever, convicted for an offence under this section is again convicted for an offence under this section, he shall be punishable for the second and for every subsequent offence with imprisonment for a term which may extend to five years or with fine, or with both.
(4) The Court may, for special and adequate reasons to be recorded in the judgment, sentence any person to imprisonment under sub-section (1) or sub-section (3), for a term less than six months.
(5) Notwithstanding anything contained in the Bharatiya Nagarik Suraksha Sanhita, 2023, all offences under this Act, except the offences referred to in sub-section (6) shall be non-cognizable and bailable.
(6) The offences specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of section 18 shall be cognizable and non-bailable.
(7) No person shall be prosecuted for any offence under this section except with the previous sanction of the proper officer, not below the rank of Commissioner.
(a) exceeds five hundred lakh rupees, with imprisonment for a term which may extend to five years or with fine, or with both; or
(b) exceeds two hundred lakh rupees but does not exceed five hundred lakh rupees, with imprisonment for a term which may extend to three years or with fine, or with both; or
(c) exceeds one hundred lakh rupees but does not exceed two hundred lakh rupees, with imprisonment for a term which may extend to one year or with fine, or with both.
(2) Whoever commits or causes to commit and retains any benefit arising out of contraventions specified in clause (f) or clause (i) of sub-section (1) of section 18, or abets the commission of an offence specified in the said sub-section, shall be punishable with imprisonment for a term which may extend to six months or with fine, or with both.
(3) Whoever, convicted for an offence under this section is again convicted for an offence under this section, he shall be punishable for the second and for every subsequent offence with imprisonment for a term which may extend to five years or with fine, or with both.
(4) The Court may, for special and adequate reasons to be recorded in the judgment, sentence any person to imprisonment under sub-section (1) or sub-section (3), for a term less than six months.
(5) Notwithstanding anything contained in the Bharatiya Nagarik Suraksha Sanhita, 2023, all offences under this Act, except the offences referred to in sub-section (6) shall be non-cognizable and bailable.
(6) The offences specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of section 18 shall be cognizable and non-bailable.
(7) No person shall be prosecuted for any offence under this section except with the previous sanction of the proper officer, not below the rank of Commissioner.
Section 20 Offences by companies.
(1) Where an offence committed by a person under this Act is a company, every person who, at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any negligence on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
(3) Where an offence under this Act has been committed by a taxable person being a partnership firm or a limited liability partnership or a Hindu undivided family or a trust, the partner or kartaor managing trustee shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly and the provisions of sub-section (2) shall, mutatis mutandis, apply to such persons.
(4) Nothing contained in this section shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.
Explanation.---For the purposes of this section,---
(a) "company" means a body corporate and includes a firm or other association of individuals; and
(b) "director", in relation to a firm, means a partner in the firm.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any negligence on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
(3) Where an offence under this Act has been committed by a taxable person being a partnership firm or a limited liability partnership or a Hindu undivided family or a trust, the partner or kartaor managing trustee shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly and the provisions of sub-section (2) shall, mutatis mutandis, apply to such persons.
(4) Nothing contained in this section shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.
Explanation.---For the purposes of this section,---
(a) "company" means a body corporate and includes a firm or other association of individuals; and
(b) "director", in relation to a firm, means a partner in the firm.