On 15-12-2025, the Ministry of Law and Justice issued Health Security se National Security Cess Act, 2025, introducing a new cess aimed at generating resources for these critical sectors.
Key Highlights:
⮚ Introduction of HSNS Cess Act is a significant step towards strengthening the nation’s public health infrastructure and national security.
⮚ The Act aims to:
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Meet the growing demands of defense and security in a rapidly changing global environment.
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Fund health programs, schemes, and infrastructure for better healthcare delivery
⮚ This Act achieves these objectives by levying a cess on machines and processes used in the manufacture or production of specified goods.
⮚ Taxable Persons:
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Any who owns, operates, or controls machines or processes for manufacturing specified goods.
⮚ Cess:
⮚ According to Section 4, a Health Security and National Security Cess will be imposed on machines installed or processes undertaken for manufacturing specified goods. This cess is in addition to existing taxes and duties under other laws.
⮚ Section 7, explains that the cess serves a dual purpose:
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Strengthening national security, and
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Enhancing public health infrastructure.
⮚ The computation of cess is primarily based on three factors:
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Rated speed of machines (pouches/tins per minute),
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Weight of goods per pouch/tin, and
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Nature of process (manual or machine-based).
⮚ Taxable persons are required to declare these parameters, which will be verified or calibrated by the proper officer to ensure accuracy.
⮚ Detailed rates are provided in Schedule II, with cess amounts ranging from ₹11 lakhs per month for manual processes to ₹849 lakhs per month for high-speed machines.
⮚ The cess is payable monthly and may be subject to abatement under prescribed conditions. If a machine or manual unit remains inoperative for 15 consecutive days or more, the cess is proportionately reduced for that period.
⮚ Offences and Penalties:
■ The Act prescribes stringent penalties and criminal liabilities for violations under Chapter VI to ensure compliance and deter evasion.
■ A taxable person can face penalties for:
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Operating machines or processes for manufacturing specified goods without declaring to the proper officer.
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Failure to pay cess beyond three months from the due date.
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Non-filing of returns, falsification of records, or furnishing false information to evade cess.
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Fraudulent refund claims.
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Obstructing officers in discharge of duties.
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Failure to obtain mandatory registration.
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Tampering with evidence or seized goods.
■ Penalties:
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Minimum penalty: ₹10,000 or an amount equal to the cess evaded or fraudulently claimed, whichever is higher.
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Persons aiding or abetting such offences may face penalties up to ₹1,00,000.
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All penalty orders require giving the person a reasonable opportunity of being heard.
■ For serious contraventions like cess evasion or fraudulent refunds:
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If amount exceeds ₹500 lakh: Imprisonment up to 5 years and/or fine.
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Between ₹200—500 lakh: Up to 3 years imprisonment.
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Between ₹100—200 lakh: Up to 1 year imprisonment.
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Repeat offenders can face imprisonment up to 5 years.
■ Certain offences may be compounded by paying a prescribed amount, subject to conditions:
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Minimum compounding amount: ₹10,000 or 50% of cess involved.
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Maximum: ₹30,000 or 150% of cess involved.
■ Compounding is not allowed for repeat offenders, high-value cases (cess > ₹1 crore), or those convicted by a court.
⮚ Revision and Appeals:
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According to Section 28 Revisional Authority can review any order if it is erroneous, illegal, or prejudicial to revenue.
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A taxable person under Section 29 appeal an adjudicating authority’s order within three months, subject to payment of admitted dues and 10% of disputed cess.
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Any person aggrieved by an appellate or revisional order may appeal to the Appellate Tribunal within 3 months, which can confirm, modify, annul, or remand the case.
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Any person required to appear before an authority or tribunal under this Act may do so through an authorized representative, such as a relative, employee, legal practitioner, or a qualified person.
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An aggrieved person may appeal to the High Court against an Appellate Tribunal order involving a substantial question of law within 180 days, and the appeal is decided by a bench of at least two judges.
⮚ Schedules:
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Schedule I: Lists goods subject to cess (currently includes pan masala and other notified goods).
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Schedule II: Specifies cess rates based on machine speed and weight of goods.