Delhi High Court Issues Notice To Centre On Plea Challenging Health Security and National Security Cess Act

The Delhi High Court on Wednesday issued notice to the Union of India in a challenge to the constitutional validity of the Health Security and National Security Cess Act, 2025, observing that there is prima facie merit in the petitioner's arguments on legislative competence and arbitrariness of the levy.

The Division Bench comprising Justice Nitin Wasudeo Sambre and Justice Ajay Digpaul was hearing a writ petition filed by Vinod J. Sharma, wherein the validity of the cess imposed on pan masala has been questioned.

The petition questions the legislative authority of the Parliament to impose such a levy in the post-GST era. The central argument of the petition posits that the newly introduced HSNS Cess, which took effect on February 1, 2026, is effectively a "duty of Excise".

The counsel for the petitioner contends that the Union Parliament lacks the legislative competence to levy such a duty following the 101st Constitutional Amendment, which introduced the Goods and Services Tax (GST). The residuary powers of the Parliament cannot be utilized for matters that have already been subsumed into the GST framework. Beyond the constitutional authority, the petitioner attacked the mechanics of how the tax is calculated. The levy specifically targets Pan Masala (falling under CTH 2106 90 20) and is based solely on the weight of the product in a pouch.

Counsel for the petitioner argued that this method is "disastrous" because it ignores the price of the pouch, leading to massive economic disparities. In certain instances, the tax burden reaches approximately 40% of the Maximum Retail Price (MRP). In contrast, premium brands face a levy of less than 1% of their MRP.

During the hearing, the counsel for the petitioner argued that the impugned cess, which came into force from February 1, 2026, is in substance a tax akin to excise duty and that Parliament lacks legislative competence to impose such a levy in the post-GST regime introduced through the 101st Constitutional Amendment.

It was contended that the power to tax goods and services now flows from Article 246A of the Constitution, and Parliament cannot invoke residuary powers to impose a cess on subjects already subsumed within GST.

Taking note of these submissions, the Court observed that there appears to be “force in the arguments” raised on both legislative competence and the arbitrary nature of the levy. Consequently, notice has been issued to the Union Government, seeking its response on the validity of the impugned legislation.

Earlier, by a February 2026 order, the Court had recorded the petitioner's detailed challenge to the statutory framework, including arguments based on Articles 270 and 246A of the Constitution, and permitted the petitioner to file written submissions.