In what could become one of the largest tax enforcement actions in India’s food services sector, authorities have uncovered a massive Goods and Services Tax (GST) evasion racket estimated at nearly Rs 70,000 crore. Popular biryani chains and restaurant groups are reportedly among those under scrutiny, with investigations pointing to large-scale suppression of sales over the past six financial years beginning 2019–20.
The revelations, first reported by The Times of India, have triggered a widening nationwide probe, with officials cautioning that the current estimates may only reflect the initial phase of findings.
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From Routine Searches to a Nationwide Crackdown
The investigation began with targeted searches in cities such as Hyderabad and Visakhapatnam, along with other locations across Telangana and Andhra Pradesh. What started as routine enforcement action quickly escalated after investigators reportedly detected irregularities in restaurant billing systems.
Officials found evidence suggesting that certain eateries were using specialised billing software to conceal portions of their daily sales. The pattern of manipulation prompted a broader inter-agency probe, with the Central Board of Direct Taxes stepping in to expand the investigation beyond state boundaries.
The Income Tax Department’s Hyderabad unit subsequently undertook an extensive forensic audit of approximately 60 terabytes of billing data. The data was linked to a software platform used by more than one lakh restaurants — estimated to represent nearly 10% of India’s restaurant billing ecosystem.
AI, Data Analytics, and 1.77 Lakh Eateries Scanned
Leveraging advanced data analytics and generative AI tools, investigators analysed transactions connected to around 1.77 lakh eateries across the country. The review covered billing transactions worth approximately Rs 2.43 lakh crore between 2019–20 and 2025–26.
Preliminary findings indicate that at least Rs 70,000 crore in sales may have been suppressed during this period. Authorities are currently computing the precise GST liability, along with interest and penalties, which could significantly increase the financial exposure of the entities involved.
Officials described the exercise as one of the largest technology-driven tax investigations undertaken in the restaurant sector.
State-Wise Impact: Karnataka Leads
Early state-level findings have revealed substantial discrepancies:
- Karnataka: Deleted billing records amounting to nearly Rs 2,000 crore.
- Telangana: Suppressed transactions worth around Rs 1,500 crore.
- Tamil Nadu: Approximately Rs 1,200 crore in questionable billing entries.
- Maharashtra and Gujarat are also under active examination.
In Telangana and Andhra Pradesh alone, hidden sales were pegged at Rs 5,141 crore. Inspections of just 40 restaurants reportedly uncovered manipulation of nearly Rs 400 crore — suggesting the scale of evasion could be far wider.
The ‘Billing Software’ Modus Operandi
Investigators have identified multiple tactics allegedly used to reduce tax outgo:
- Deletion of cash invoices while retaining selective digital records.
- Wiping out billing data for specific days or periods — in some cases up to 30 consecutive days — before filing GST returns.
- Under-reporting of revenue figures in GST filings without fully deleting records.
These methods, officials believe, were designed to ensure that declared turnover figures remained substantially lower than actual collections.
Crucially, data recovered from the billing software provider’s facility in Ahmedabad was subjected to forensic examination at the Income Tax Department’s digital lab in Hyderabad. AI-powered systems were deployed to match GST registrations with restaurant databases and flag anomalies using open-source intelligence inputs.
Industry-Wide Implications
The findings have raised serious concerns about compliance standards within India’s rapidly expanding food and beverage industry. With more billing platforms and restaurant chains now under scrutiny, authorities suspect that the current Rs 70,000 crore estimate may represent only a fraction of the total evasion.
If confirmed, the case could reshape compliance oversight in the hospitality sector, potentially leading to tighter technological audits, stricter billing software regulations, and intensified GST enforcement across states.
For now, tax authorities continue to sift through vast datasets — and the restaurant industry waits to see how deep the investigation ultimately runs.
