Vegetable Vendor Receives ₹29 Lakh GST Notice Over UPI Payments

1.Introduction

In a surprising turn of events that highlights the growing intersection between small businesses and tax enforcement, a vegetable vendor from Haveri, Karnataka, has received a ₹29 lakh Goods and Services Tax (GST) notice. The incident has sparked public debate over the impact of GST compliance on micro-businesses and the role of digital payments in tax monitoring.

2. Who Is Involved?

The individual at the center of this case is Shankargouda Hadimani, a small vegetable seller operating near the Municipal High School grounds in Haveri. For the past four years, he has been selling vegetables and accepting payments primarily through UPI and digital wallets.

3. The Reason Behind the GST Notice

Despite being unregistered under GST, Shankargouda's digital transactions over four years totaled ₹1.63 crore, prompting tax authorities to take notice.

The GST officials issued a tax demand of ₹29 lakh, citing:

Non-registration under GST laws despite high turnover.

Failure to remit GST applicable on taxable supplies.

Possible violation of GST thresholds applicable for traders.

4. Legal Thresholds and GST Applicability

Under current GST regulations:

Businesses with a turnover exceeding ₹40 lakh (for goods) or ₹20 lakh (for services) must register under GST.

Once registered, such businesses are required to collect and pay GST on their sales.

Even though the vendor was operating as a micro-business, his digital income records indicated a much larger turnover, making him liable under the law.

5.Digital Payments Leave a Traceable Trail

This case underscores a crucial point — digital transactions are transparent and traceable. The vendor’s regular use of UPI and e-wallets created a data footprint, which likely alerted the GST intelligence systems used by tax departments.

With increasing reliance on data analytics and AI-backed surveillance tools, the tax authorities are becoming more effective in identifying potential non-compliance, even among unregistered small-scale vendors.

6. Immediate Reaction from the Vendor

In response to the tax notice:

The vendor was reportedly shocked and confused by the demand.

He has since stopped accepting UPI payments and reverted to cash-only transactions, fearing further complications.