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Investigators allege that some restaurant chains used billing software that allowed invoices, particularly cash sales, to be selectively removed, effectively reducing their reported turnover.
An analysis of a billing software has pointed to under-reporting of revenue worth Rs 70,000 crore by restaurants across the country. (AI generated image)
If you paid for your biryani order in cash, chances are that order may have fueled tax evasion worth crores of rupees. Whenever a customer paid in cash for a plate of biryani, the transaction would have been recorded – and then quietly erased. Investigators allege that some restaurant chains used billing software that allowed them to selectively remove invoices, particularly cash sales, before filing tax returns, effectively reducing their reported turnover. The order, which looked like a typical food order, may have helped create a parallel bookkeeping system – one set of numbers for business operations, another for tax authorities.
The Income Tax Department’s investigation unit in Hyderabad has uncovered a widespread tax evasion scam involving popular biryani restaurant chains, and the fallout has spread beyond Hyderabad to across India. An analysis of a billing software points to under-reporting of revenue by Rs 70,000 crore.
What is a scam?
according to a times of India According to the report, by analyzing huge amounts of data (about 60 terabytes) from restaurant billing software widely used by over 1 lakh restaurants, officials found that these eateries were suppressing reported sales to avoid taxes since the 2019-20 financial year.
According to the report, investigators estimate that restaurants using the billing software have under-reported turnover by at least Rs 70,000 crore. Of this, about Rs 13,317 crore was recorded by the software itself in deleted sales records (sales were recorded and later deleted). In Andhra Pradesh and Telangana alone, the suppressed sales in the analyzed sample reached approximately ₹5,141 crore.
The tax department had raided several biryani chains in Hyderabad in November 2025, focusing on major names like Pista House, Shah Ghaus and Mehfil. The teams searched outlets, corporate offices, software provider offices and residences of people associated with these businesses.
The officials seized around Rs 6 crore in cash from the premises and associated locations of these restaurant chains. Media reports also indicated that during the searches, officials recovered large amounts of cash, gold and property-related documents from the homes of the owners of these chains – reportedly around Rs 20 crore in cash and significant amounts of gold, as well as records related to properties and other assets.
Officials alleged that these restaurants were diverting cash sales and sending money through rotated UPI accounts to avoid tax and GST liabilities. Preliminary estimates at this stage suggest unaccounted income of around Rs 600 crore, further tax claims will be determined after full reconstruction of the sale is completed.
How to underbill through billing software
According to findings from an investigation by the Income Tax Department, many restaurants were recording all daily sales in their point-of-sale (POS) systems as usual – but were selectively deleting certain transactions before filing tax returns later. All this was done through a billing software
In a typical restaurant setup, each order generates an invoice in the billing system. Whether a customer pays by cash, card or UPI, the sale is recorded and becomes part of the outlet’s total turnover. That turnover determines how much GST and income tax the business has to pay. However, investigators allege that some establishments targeted cash transactions for removal. Since digital payments leave independent pathways through banks and payment gateways, they are difficult to suppress. Cash, on the other hand, exists only in the restaurant’s internal records once it is collected. If the associated invoice is deleted from the software, the official record of that sale effectively disappears.
The report suggests that billing software used by many restaurants had features that allowed invoices to be deleted individually or even in bulk. In some instances, entire blocks of challan numbers or date ranges may allegedly be erased before filing the return. This meant that a restaurant could legitimately record Rs 10 lakh in daily sales, but later erase a large portion of the cash invoices, thereby reducing the turnover reflected in tax filings. When this is repeated over months and years – and across multiple outlets – the suppressed turnover can reach hundreds of crores.
It means – Customer paid and received the bill. But if that invoice was later deleted from the system, the related revenue could not be reflected in the tax filing. Across different outlets, cities and years, such practices – if proven – can lead to substantial differences between actual turnover and reported earnings.
How investigators uncovered a massive theft
The investigation reportedly gained momentum after officials analyzed huge amounts of billing data spanning several financial years. Using data analytics tools and AI-based pattern recognition, officials examined deletion patterns, invoicing gaps and mismatches between reported turnover and other indicators such as supplier purchases and banking activity. If a restaurant was purchasing raw ingredients in line with high sales volumes, but was declaring very little turnover in tax returns, that raised red flags. Similarly, unusually frequent deletion of cash challans before GST filing suggests possible suppression.
Beyond the digital trail, search and seizure operations were conducted in some Hyderabad-based chains. During these raids, officials reportedly seized cash and examined financial documents and electronic records. While physical seizures attract people’s attention, the core of the matter is to reconstruct the destroyed sales and compare the actual business activity with what was declared to the tax authorities.
What will happen next?
Nationwide investigation: After initially focusing on a few restaurants in Hyderabad, the investigation has spread across India. The Income Tax Department is no longer keeping an eye on just a handful of outlets but is looking at it as a systemic tax-evasion pattern in the restaurant and hospitality sector, especially where the same billing software is used.
Suppliers and Raw Materials: The investigation has extended beyond the restaurant. Tax authorities have started investigating suppliers of key raw materials like rice and meat linked to these biryani chains. Authorities have inspected the premises of these suppliers to investigate whether their records – such as quantities supplied and purchase prices – were manipulated to hide actual restaurant production. The goal is to reconstruct actual sales volumes and uncover additional layers of suppression beyond deleted invoices.
Forensics and Data Analysis: While cash and records were exposed in the initial raids, the main work now is digital forensic reconstruction of the deleted records. Authorities are using advanced analytics and AI to track patterns of deletion of invoices and mismatches between what was recorded on the billing software and what was declared in the tax filings.
They are also isolating features in billing tools – such as the ‘bulk delete’ function – that can be misused to systematically suppress turnover records. This stage is meticulous and takes months, as officials compare billing logs, bank data, supplier purchases and GST returns to build a complete picture.
Tax demands, fines and notices: Once the digital reconstruction takes place, the next big action will be a formal tax demand. The Income Tax Department, after reconstructing the data, will issue reassessment orders for the income that was allegedly concealed. This will also attract penalty notices and interest, which may increase the liabilities far beyond the undisclosed turnover. Since GST is linked to reported turnover, Goods and Services Tax authorities are also expected to issue GST demand notices based on recalculated sales figures.
These notices have not been fully released yet, as officials are still verifying and finalizing the reworked numbers.
Software companies under the radar: In addition to individual restaurants, investigators are said to be looking into how billing software platforms were configured and whether certain tools enabled large-scale abuse. This could lead to regulatory scrutiny or compliance changes for POS/billing software providers, including mandatory audit trails, restrictions on deleting invoices, and enhanced reporting features for tax purposes.
February 19, 2026, 12:50 IST
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