80 Hyderabad Restaurants Flagged in Telangana GST Check

Hyderabad: Restaurants whose Goods and Services Tax (GST) registrations had been cancelled allegedly continued collecting the tax from customers, while several others claimed Input Tax Credit (ITC) despite being ineligible, according to findings by Telangana's GST Department.

More than 100 restaurants and eateries across Telangana have been flagged for suspected GST irregularities, with the majority located in Hyderabad. Officials said a popular restaurant in the Madhapur-HITEC City area is also among the establishments under scrutiny.

Tax Collected Without GST Registration

Restaurants whose GST registrations had been cancelled allegedly continued collecting GST from customers despite no longer being authorised to do so. The Telangana GST Department identified several such establishments during its investigation into suspected tax irregularities.  Officials are examining whether the amounts collected were improperly retained and what further action should be taken. 

The suspected irregularities came to light through artificial intelligence (AI)-based data analytics used by the GST Department to cross-check tax returns with registration details, supplier invoices, purchase records, sales figures and digital payment transactions. The system helps officials identify discrepancies and detect potential tax violations.

“With analytics, it is becoming increasingly difficult for such frauds to go undetected,” a senior tax official said.

The department is also examining AI-based GST compliance models implemented in Tamil Nadu, Chhattisgarh and Maharashtra to strengthen its monitoring systems and improve the detection of tax irregularities.

The GST Department is expected to continue examining the financial records of the flagged establishments to determine the extent of the suspected  violations. Restaurants found collecting GST without valid registration or claiming ineligible tax credits may face action under applicable GST provisions, including recovery of dues and penalties.

The investigation also highlighted the need for businesses to maintain proper tax records and ensure compliance with GST regulations. Officials are expected to take further steps based on the findings of the ongoing verification process.