When we go to a restaurant to eat biryani with our family or relatives, we get a receipt after paying the bill. If you have paid this bill in cash, then you will be surprised to know that your simple bill has become an important part of a huge tax scam. The Income Tax Department has exposed a big network in which bills were handed over to customers but they were completely erased from the system. This is not a small theft. According to the investigating agencies, revenue of about Rs 70,000 crore has been reduced across the country by misuse of a particular billing software. This game gave rise to a ‘parallel ledger’ within the restaurant business, where the actual business figures were one thing and the figures shown to the tax department were something else.
How did your receipt disappear from the system?
During normal restaurant operations, whenever a customer places an order, an invoice is generated in the billing system. There is a bank record of digital payments made through card or UPI, so it is difficult to hide it. But the record of cash transactions is limited to the internal database of the restaurant only. This technical flaw was taken advantage of. Investigation has revealed that the restaurant operators used to record the day’s sales in their point-of-sale (POS) system but selectively deleted the cash payment receipts from the software before filing the tax returns.
This billing software allegedly had features that could completely delete receipts, one by one or in bulk. In such a situation, if a restaurant earned Rs 10 lakh in a day, then after deleting the receipts, that earning was recorded as very less on paper. Due to this process which lasted for years, the tax department had to suffer huge losses.
Investigation started from a famous chain of Hyderabad
The strings of this entire matter are mainly connected to Hyderabad. The investigation unit of the Income Tax Department had raided popular biryani restaurant chains like Pista House, Shah Gaus and Mehfil in November 2025. This action was taken on the premises of outlets, corporate offices, software providing companies and owners. During this period, about Rs 6 crore cash was recovered from these establishments. According to media reports, cash worth about Rs 20 crore, huge amount of gold and documents of important properties were also seized from the house of the owners.
The scope of the investigation became larger when officials analyzed 60 terabyte (TB) of data of this billing software used by more than one lakh restaurants across the country. Investigation revealed that this game of hiding sales figures was going on since the financial year 2019-20. Records of deleted sales worth Rs 13,317 crore were found in the logs of the software itself. The sample data of Andhra Pradesh and Telangana alone has revealed hidden sales of Rs 5,141 crore.
Artificial Intelligence revealed the secret
It was not possible to catch such a big scam through paper investigation alone. Income tax officials made full use of Artificial Intelligence (AI) and data analytics tools. They analyzed the patterns of deleted receipts, differences between invoice numbers and bank activities in depth. A big clue was also found from the purchase of raw materials. Officials found that these restaurants were purchasing large quantities of rice and meat but were reporting very low sales. This was a clear and obvious sign of wrongdoing. Apart from this, a case of money being diverted by rotating UPI accounts also came to light, due to which, in the initial investigation itself, undisclosed income was estimated to be around Rs 600 crore.
Now how will we tighten the noose on tax evaders?
The case which started with a few restaurants in Hyderabad has now become a national level investigation. The Income Tax Department is now looking at this as a systematic tax evasion model in the hospitality sector. The scope of investigation has now expanded beyond restaurants to the suppliers who provide them with raw materials (like rice and meat).
The main goal of the authorities now is to recover all those deleted records through digital forensics. As soon as the matching of software logs, bank data and supplier information is complete, the Income Tax Department will impose heavy tax demands, penalties and interest on these establishments. Due to low turnover, the GST department is also preparing to issue a notice at its level.