Speaker P Dhanapal said the DMK MLAs' display amounted to a "breach of privilege".
During a debate on the concluding day of the ongoing session, Leader of opposition Stalin sought to raise the issue of the availability of banned substances such as gutkha in the state.
Soon many of his colleagues were flaunting what appeared to be gutkha sachets, which the Treasury benches objected to.
Finance Minister D Jayakumar said it was "illegal" for the DMK to bring "banned products" to the Assembly and said its action "was being recorded by cameras".
The Speaker promised action against the DMK.
"I will take action for bringing in banned products to the Assembly," he said before referring the matter to the privileges committee, while the DMK staged a walkout.
Palaniswami said if the DMK members had actually found such banned substances, they should have approached the police for legal action but had not done so.
The 'gutkha' (a mixture of chewing tobacco, betel nut and palm nut) row has come to haunt the ruling AIADMK, with Income Tax authorities recently unearthing a "payout" to a minister and officials by a 'gutkha' manufacturer who had been raided by the tax authorities.
Palaniswami had earlier told the state Assembly that the Tamil Nadu vigilance and anti-corruption department was probing the matter.
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