The Income Tax department has uncovered a nationwide tax evasion racket in the food and beverage industry sector. The probe started with a targeted inquiry into popular biryani chains in Hyderabad. However, during the probe, the IT department uncovered suppressed sales estimated at a staggering Rs 70,000 crore since 2019-20.
How AI exposed a nationwide billing manipulation network
The Hyderabad investigation unit analysed nearly 60 terabytes of transactional data linked to a pan-India billing software platform that is used by over one lakh restaurants. According to officials, the software controls roughly 10% of the restaurant billing software market. It contained data associated with 1.77 lakh restaurant IDs across the country.
The department used advanced big data analytics and Artificial Intelligence tools, including Generative AI, to map billing records, GST numbers and transaction trails at the digital forensic and analytics lab in Hyderabad. The data was accessed from the software provider’s centre in Ahmedabad.
Across six financial years, from 2019–20 to 2025–26, the dataset reflected billing worth Rs 2.43 lakh crore. Officials have concluded, based on sample estimates, that nearly 27 per cent of total sales were suppressed.
Deletion patterns and selective under-reporting
According to officials, restaurants typically record all transactions, card, UPI and cash, to prevent internal leakages. However, during the probe, it was revealed that systematic manipulation occurred at the backend.
One of the key red flags was selective deletion of cash invoices. In several cases, restaurants allegedly retained only a portion of cash transactions while deleting the rest to reduce income tax and GST liabilities. Investigators also flagged bulk deletions, where billing records for up to 30 days were wiped clean before returns were filed, reflecting only a fraction of actual sales.
Out of the estimated Rs 70,000 crore suppressed turnover, Rs 13,317 crore was linked specifically to post-billing deletions recorded in the software.
In Andhra Pradesh and Telangana alone, suppressed sales were pegged at Rs 5,141 crore. Physical and digital verification of a sample of 40 restaurants in the two states detected suppression of around Rs 400 crore.
Tamil Nadu, Karnataka, Telangana, Maharashtra and Gujarat emerged as the top five states where evasion was detected. Karnataka recorded deletions of nearly Rs 2,000 crore, followed by Telangana at Rs 1,500 crore and Tamil Nadu at Rs 1,200 crore.
The probe into the matter has since been expanded nationwide by the Central Board of Direct Taxes. Officials have indicated that the present findings may only be the tip of the iceberg, as there are several billing platforms operating in the sector.
