₹70,000 Crore Sales Suppression? AI-Facilitated Probe Into Hyderabad Restaurants Reveals Massive Tax Evasion Scam

(MENAFN- Live Mint) A shocking tax evasion scam has come to light, with investigators revealing that multiple eateries across Karnataka, Tamil Nadu, and five other states have suppressed sales turnover worth at least ₹70,000 crore since the 2019-20 financial year. What started as an investigation into biryani restaurant chains in Hyderabad reportedly revealed more details about eateries suppressing their sales figures.

According to a report by the Times of India, investigators analysed 60 terabytes of transactional data of a pan-India billing software used by more than one lakh restaurants. They also used Generative AI to crunch the data spanning 1.77 lakh restaurant IDs.

Detailed physical and digital investigations in a sample of 40 restaurants in Andhra Pradesh and Telangana detected suppression of about ₹400 crore.

How did the eateries suppress the sales?

Using data from a billing software provider's centre in Ahmedabad, officials analysed transactions at the department's digital forensic and analytics lab in Ayakar Bhavan, Hyderabad.

Restaurants would record all transactions-cash, card, and UPI-to maintain internal checks, but later manipulate backend data, reported TOI.

Documents accessed by the media outlet revealed two patterns: selective deletion of cash invoices to shrink reported revenue, and bulk wiping of entire billing periods-sometimes up to 30 days-before filing returns that showed only a fraction of actual earnings.

The probe examined transactions worth ₹2.43 lakh crore spanning six financial years from 2019–20 to 2025–26. Using high-capacity systems and AI tools, including generative AI, officials mapped GST data to individual outlets using publicly available information, as per the report.

Karnataka tops the list

Tax officials uncovered the large-scale sales suppression by restaurants across India with -Tamil Nadu, Karnataka, Telangana, Maharashtra and Gujarat-emerging as the top five states where the evasion was detected.

Karnataka topped the list with suspected evasion of nearly ₹2,000 crore, followed by Telangana ( ₹1,500 crore) and Tamil Nadu ( ₹1,200 crore). Based on a sample estimate, officials have concluded that 27% of total sales were suppressed.

What began as a regional probe in Hyderabad, Visakhapatnam and nearby towns soon exposed a wider pattern, prompting the Central Board of Direct Taxes to scale the investigation nationwide. Officials now believe this may just be the tip of the iceberg, with more billing platforms and businesses likely to come under scrutiny.

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