How Hyderabad biryani chains probe exposed ₹70,000 cr tax evasion scam

A routine investigation in Hyderabad uncovered a nationwide restaurant billing scam, where AI analysis of 60 TB data revealed ₹70,000 crore in suppressed sales since 2019-20

What began as a routine probe into a biryani restaurant chain in Hyderabad has exposed a massive tax evasion racket across India’s food industry, potentially running into thousands of crores.

 

According to a report by The Times of India, investigators uncovered widespread manipulation of restaurant billing software that allowed eateries to significantly under-report their income and avoid paying taxes.

 

The Income Tax Department’s Hyderabad investigation unit found that since the 2019-20 financial year, restaurants had suppressed sales worth at least ₹70,000 crore. In many instances, after customers completed payments, bills were either deleted or altered within the billing systems.

 

 

How was the scam uncovered?

 

The breakthrough came while tracking a billing software platform that accounts for nearly 10 per cent of the restaurant billing software market.

 

Officials deployed big data analytics and artificial intelligence (AI) tools, including Generative AI, to examine approximately 177,000 restaurant IDs and analyse around 60 terabytes of transaction data. Working from the billing software provider’s centre in Ahmedabad, officials accessed and processed the data at the department’s digital forensic and analytics lab at Ayakar Bhavan in Hyderabad.

 

The dataset covered restaurant sales amounting to nearly ₹2.43 trillion over six years. To verify discrepancies, officers matched billing data with external records such as Goods and Services Tax (GST) numbers and publicly available listings.

 

Bill deletions and state-wise findings

 

According to The Times of India report, restaurants using the software had deleted bills worth more than ₹13,317 crore. In Andhra Pradesh and Telangana alone, suppressed sales were pegged at ₹5,141 crore.

 

To corroborate the findings, officials conducted detailed physical and digital verification at a sample of 40 restaurants in Andhra Pradesh and Telangana. The exercise revealed suppression amounting to ₹400 crore.

 

The top five states where evasion was detected were Tamil Nadu, Karnataka, Telangana, Maharashtra, and Gujarat.

 

Karnataka recorded the highest level of deleted transactions at approximately ₹2,000 crore, followed by Telangana (₹1,500 crore), and Tamil Nadu (₹1,200 crore).

 

In some cases, restaurants did not even delete billing records but still under-reported sales in their income tax returns. Based on a sample analysis, officials estimated that around 27 per cent of total sales had been suppressed.

 

How the evasion worked

 

According to The Times of India, one of the most common tactics was the selective deletion of cash invoices. Restaurants allegedly retained only a portion of cash transactions while erasing the rest to reduce their income tax and GST liabilities.

 

Another method involved wiping out all billing data for a certain day, and in some instances, even for an entire month, before filing returns that reflected artificially low income.

 

The investigation initially focused on Hyderabad, Visakhapatnam and nearby towns. However, once the scale of the alleged manipulation became apparent, authorities expanded the probe to cover restaurants across the country.