Restaurant Billing Software 'Delete' Feature Enables Massive Tax Evasion
Tax investigators have uncovered a powerful 'delete' button within widely used restaurant billing software that can erase entire chunks of sales history, sometimes up to a month at a time. This feature, built into popular point of sale (POS) systems, may have enabled large-scale suppression of turnover while leaving minimal traces during routine inspections.
Nationwide Crackdown Originates in Hyderabad
The discovery emerged during a nationwide crackdown led from Hyderabad, where the income tax investigation unit initially searched a biryani restaurant chain before expanding the probe to dozens of eateries. Acting under section 133A of the Income Tax Act, officials conducted survey operations to compare what restaurants displayed on billing screens with what could be reconstructed from backend data and system logs.
In one notable case in Hyderabad, investigators probing a vegetarian tiffin outlet serving idli, dosa, and uttapam alleged sales suppression of nearly ₹60 crore over five years. Officials reported similar patterns across day-long tiffin centers, biryani outlets, and non-vegetarian restaurants, with some establishments allegedly evading taxes on tens or even hundreds of crores annually. Another instance revealed a non-vegetarian restaurant suppressing approximately ₹20 crore over five years.
Four Built-In Functions Enable Suppression
Investigators identified four built-in functions that, while legitimate in design, could be misused to reduce reported turnover:
- Individual Bill Deletion: Intended to correct errors, selective removal of high-value invoices could artificially lower reported sales.
- Bulk Deletion Function: This feature, now central to the probe, allows all bills within a chosen date range of up to 30 days to be removed at once. Investigators found no visible limit on usage frequency, raising concerns that entire business periods could be wiped from records.
- Post-Generation Bill Modification: This function permits changes after invoice generation. Officials cited cases where a ₹2,784 invoice was allegedly altered to ₹27. While some adjustments may be legitimate, many involved drastic reductions exceeding 20-30% of original values.
- Turnover Reconstruction Method: Investigators estimated 'true' billing by adding deleted invoices and value reductions from modified bills to remaining front-end sales figures. This reconstructed turnover was then compared with income declared in tax returns to calculate suppression.
Widespread Suppression Patterns Emerge
Based on sample findings from Andhra Pradesh and Telangana, suppression was detected in 2,650 of 3,734 PANs examined. Officials identified 684 cases where suppressed turnover exceeded ₹1 crore and 231 cases reporting zero or negligible GST turnover. In Hyderabad alone, 416 cases showed suppression above ₹1 crore, while 155 cases recorded suppression exceeding 12 times the declared turnover.
AI Tools Deployed to Analyze Massive Dataset
Forensic analysis helped distinguish genuine corrections from suspicious changes. Legitimate edits typically occur on the same day and involve small adjustments, while questionable modifications often happen days or months later—sometimes close to the financial year-end—and involve steep reductions. Bulk edits executed within seconds were treated as major red flags.
To analyze the massive dataset, investigators used high-capacity forensic systems and AI tools, including Generative AI. The technology helped link GST numbers to restaurant entities by scraping publicly available information instead of waiting for responses through official channels. Approximately 15,000 GST numbers were mapped, along with bills uploaded online by customers, to establish connections.
Potential Policy Changes on the Horizon
Authorities indicated the findings could trigger broader policy changes, including:
- Stricter audit logs for POS software
- Tamper-proof transaction storage systems
- Deeper integration between billing systems and GST reporting
- Standardized compliance norms for software providers
The investigation highlights how legitimate software features can be exploited for tax evasion, prompting calls for enhanced regulatory oversight in the restaurant industry's digital infrastructure.
