Hyderabad Biryani Chain Investigation Exposes Massive Tax Evasion Scam in Food Industry
An in-depth probe by the Income Tax department's Hyderabad unit into biryani restaurant chains has uncovered a widespread tax evasion scheme in the food and beverages sector, amounting to thousands of crores of rupees. By analyzing a staggering 60 terabytes of transactional data from a pan-India billing software used by over one lakh restaurants, officials have revealed that these establishments suppressed sales turnover worth at least Rs 70,000 crore since the 2019-20 financial year.
Big Data and AI Tools Uncover Deletion Patterns
Investigators employed advanced big data analysis and artificial intelligence tools, including Generative AI, to crunch data spanning 1.77 lakh restaurant IDs. The software tracked controls approximately 10% of the total restaurant billing software market. Across India, the software provider recorded post-billing deletions totaling Rs 13,317 crore out of the suppressed Rs 70,000 crore. In Andhra Pradesh and Telangana alone, sales suppression reached Rs 5,141 crore.
Detailed physical and digital inquiries in a sample of 40 restaurants across these two states detected suppression of about Rs 400 crore. The top five states where evasion was identified include Tamil Nadu, Karnataka, Telangana, Maharashtra, and Gujarat. Karnataka logged the highest instances of deletion at roughly Rs 2,000 crore, followed by Telangana with Rs 1,500 crore and Tamil Nadu with Rs 1,200 crore.
Inside the Evasion Playbook: Deletions, Edits, and Under-Reporting
Investigators detailed how restaurants typically enter all sales—including card, UPI, and cash transactions—into the software to prevent internal manipulation. However, patterns emerged where cash invoices were selectively deleted, with restaurants allegedly retaining only a portion of entries to reduce income tax and GST liabilities. Another method involved bulk deletion, wiping bills clean for specific date ranges, sometimes up to 30 days, followed by filing returns that reflected only a fraction of actual sales.
Officials noted that some restaurants did not even bother to delete records while under-reporting sales in their income tax returns. Based on sample estimates, they concluded that 27% of total sales were suppressed. The dataset covered billing of about Rs 2.43 lakh crore across six financial years from 2019–20 to 2025–26.
Nationwide Expansion of the Probe
Working from data accessed at the billing software provider's center in Ahmedabad, officials analyzed transactions at the department's digital forensic and analytics lab in Ayakar Bhavan, Hyderabad. Initially, searches in Hyderabad, Visakhapatnam, and other towns in Telangana and Andhra Pradesh revealed the software was being used for sales suppression. This led the Central Board of Direct Taxes to expand the investigation nationwide.
AI tools, including Generative AI, were utilized to quickly map GST numbers to restaurants using open-source information and publicly available online material. Officials believe the current findings represent only the tip of the iceberg, noting that multiple billing platforms operate in the sector and could face similar backend scrutiny in the future. The tax with penalty on the suppressed income is yet to be calculated, highlighting the ongoing nature of this major financial probe.
