Petpooja, Restaurants & The Missing Sales Trail Under Taxmen’s Lens

Imagine a restaurant packed to the brim on a busy Friday night — orders flying in, tables turning quickly, and the billing counter barely getting a moment to breathe. Customers pay for their orders, collect a printed receipt and leave well-fed. However, what they do not suspect is that restaurants could quietly delete some of those bills from their systems hours later.

It is precisely this trail that tax officials are following. Sleuths from the GST and income tax departments have raided nearly 100 restaurants across 45 cities since the end of last year, and what they have found is not unaccounted-for cash but a far more systemic pattern of tampering with or completely erasing sales. 

Sources from the tax department told Inc42 that several arrests have been made in this regard. Concealed sales, as per sources, in Punjab alone have already crossed ₹5,000 Cr, and the figure is expected to rise further as more restaurants come under scrutiny. 

In the crosshairs of tax officials is also the provider of SaaS-based POS solutions for restaurants, Petpooja. “The startup is now firmly on the radar, as it may have played a central role in enabling restaurants to manipulate their sales,” a tax official told Inc42. 

Founded in 2011 by brothers Parthiv and Apurv Patel, Petpooja initially started as a B2B food delivery service before pivoting to payroll, order management and invoice automation for restaurants. The startup provides its services to more than 1 Lakh restaurants across India, the Middle East, the US, and Africa. The startup reported a revenue of ₹101 Cr in FY25, while its loss increased to ₹21.4 Cr. 

Having raised $22 Mn across multiple funding rounds from Dharna Capital, Aroa Ventures and several prominent angel investors such as Ashish Gupta, cofounder of Helion Ventures; Abhiraj Singh Bhal, Varun Khaitan, cofounders of Urban Company, the startup offers a suite of products, including Petpooja Purchase, Petpooja Tasks, Petpooja Invoices and Petpooja Payroll. 

Its flagship product, Petpooja POS, which manages end-to-end restaurant operations, is the bone of contention. 

“The software provided a hidden feature that allowed editing and deletion of generated bills. While most restaurant software providers allow minor edits or corrections, PetPooja allegedly enabled the bulk deletion of bills within a selected date range in seconds. The entire restaurant ecosystem knows about this,” said an industry insider, requesting anonymity. 

Transactions processed via PetPooja, when matched against income tax filings, revealed discrepancies, prompting a deeper probe into the books of several restaurant chains. The investigation initially focused on popular biryani chains in Hyderabad. Authorities soon realised that the practice was not limited to a single city but extended across the country.

The Modus Operandi

As per Inc42 sources, restaurants have been manipulating sales primarily by deleting bills or modifying them. In both cases, only cash transactions were picked, as digital payments can be easily traced. Tax officials also told Inc42 that such practices generally happen at the end of a quarter or financial year.

In another method, restaurants would alter bill amounts and underreport sales numbers and evade taxes. This was especially prevalent in establishments serving alcohol, where tax rates vary sharply, 5% for food versus 18% for liquor, creating more room to understate sales. Inc42 learnt that several restaurants and bars in the Delhi NCR region have also underreported sales through Petpooja’s software to reduce tax liability, despite billing customers in full. 

“Petpooja’s software allows restaurant owners to reduce the sales amount, without disturbing the bill numbers. Let’s say the restaurant owners want to reduce their ₹1 Cr sales to ₹70 Lakh, the software will start removing items worth ₹30 Lakh in various bills,” an industry insider said, adding that underbilling has long existed in the restaurant industry, but Petpooja allegedly took it too far, effectively becoming its unique selling proposition. 

Petpooja’s Stand On Allegations 

Responding to Inc42, Petpooja’s cofounders said that the startup is an infrastructure platform for invoice generation and record-keeping. 

“It is not a tax tool, a compliance tool, or a substitute for professional tax advisory. Individual business owners remain solely and entirely responsible for tax filing and all regulatory compliance obligations. The ability to modify or delete entries is a standard, industry-wide functional feature present across every restaurant POS and accounting software platforms globally,” the company said in an email response.

In high-volume environments, the founders added, merchants must have the operational autonomy to correct human errors or manage order cancellations in real time. 

There is currently no rule in India that clearly defines which data or audit logs software providers must maintain. Despite this, Petpooja says that it has kept detailed records of every change made on its platform.

“Petpooja stands ready to support and collaborate with regulators toward that goal,” the company said.

Earlier this year, tax officials raided Petpooja’s offices and confiscated 60 TB of data to trace deleted or altered records stored on its cloud. According to department sources, more arrests are expected in the coming weeks. The GST department also issued a summons to Petoooja’s founders earlier this year.

Edited By Shishir Parasher

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