Gujarat SGST Busts Rs.52 Crore GST Evasion in Restaurant Sector

Ahmedabad | Gujarat —-In a major crackdown on tax fraud, the Gujarat State Tax Department (SGST) has unearthed large-scale GST evasion in the state’s food and restaurant sector. Acting on specific intelligence inputs and public complaints, the department exposed fraudulent practices involving ₹52.07 crore worth of unaccounted transactions, resulting in tax evasion of ₹4.88 crore, including interest and penalties.

The coordinated enforcement operation was carried out on 21st and 22nd September 2025 across 25 premises linked to 16 taxpayers in Ahmedabad, Vadodara, Surat, Gandhinagar, Bhavnagar, Junagadh, and Rajkot.

Undercover Visits Reveal Fraud

Officials first visited several restaurants and food outlets discreetly as customers to study their billing processes. These undercover inspections revealed glaring discrepancies between actual sales and reported figures.

According to SGST, taxpayers engaged in fraudulent tactics such as:

Using multiple QR codes to divert payments into undisclosed bank accounts,

Suppressing sales by not issuing invoices, and

Deliberately underreporting turnover to remain within the ₹1.50 crore ceiling limit of the GST Composition Scheme.

“This deliberate manipulation was aimed at concealing real sales and unlawfully availing benefits of the Composition Scheme. Such actions not only cause revenue loss to the government but also create unfair competition in the market,” said a senior SGST official involved in the investigation.

Massive Tax Evasion Uncovered

The search operations revealed unaccounted turnover of ₹52.07 crore. As a result, tax evasion worth ₹4.88 crore has been calculated, and recovery proceedings have already been initiated against the violators.

Legal action is also being pursued under GST provisions to ensure accountability and deter similar practices in the future.

Intelligence-Based Enforcement Strengthened

The case demonstrates SGST’s increasing reliance on intelligence-driven enforcement and innovative investigation methods. Undercover customer visits, data analytics, and discreet monitoring helped officials accurately identify fraudulent practices before carrying out the raids.

“We are committed to intensifying enforcement measures. Businesses attempting to misuse the GST Composition Scheme will face strict action. Our priority is safeguarding government revenue and ensuring a fair business environment for compliant taxpayers,” the SGST spokesperson stated.

Safeguarding Fair Business Practices

The SGST emphasized that such frauds distort market competition, where honest taxpayers face disadvantages against those engaging in tax evasion. The department assured that it will continue targeted operations in sectors prone to GST violations.

The crackdown also serves as a warning to businesses misusing provisions of the GST Composition Scheme, which was originally designed to ease compliance for small taxpayers.