Haveri Vegetable Vendor Slapped With ₹29 Lakh GST Notice Over UPI Transactions Worth ₹1.63 Crore

Haveri Vegetable Vendor Slapped With ₹29 Lakh GST Notice Over UPI Transactions Worth ₹1.63 Crore

A humble vegetable vendor from Karnataka’s Haveri district has found himself in the middle of a taxation storm after receiving a Goods and Services Tax (GST) notice of ₹29 lakh. The notice was issued by tax authorities who flagged digital transactions worth ₹1.63 crore conducted via UPI over the last four years.

The vendor, who operates a small stall selling fresh vegetables, was reportedly stunned by the notice. Fresh vegetables are exempt from GST under India’s taxation laws. However, it was not the goods he sold but the scale and mode of his transactions that caught the attention of officials. The vendor’s UPI records, including payments made to and from farmers and customers, triggered a red flag due to their cumulative value exceeding ₹1 crore — the GST registration threshold for small businesses.

According to The Hindu, the vendor primarily procured produce directly from local farmers and used UPI to make and receive payments, maintaining a digital trail of his business. These transactions were carried out with full transparency, but the high turnover calculated from his digital records brought him under the GST scanner. Authorities presumed a taxable business turnover and raised a demand of ₹29 lakh in dues and penalties.

Officials defended the action by stating that any business exceeding the ₹40 lakh threshold for goods (₹20 lakh in some states) must register for GST and file returns, regardless of the tax exemption status of the goods sold. Since the vendor had not registered or filed returns, the department treated the total transaction amount as taxable turnover and calculated GST accordingly.

However, tax experts and citizen groups have voiced concern over the notice. They argue that small vendors are being unfairly penalized for embracing digital transactions — a move widely encouraged by the government post-demonetization and during the Digital India campaign.

“Vegetable sales are exempt from GST, and if the vendor has evidence that his transactions relate solely to fresh produce, the tax demand should not hold up,” said a Bengaluru-based tax consultant, speaking to India Today. He added that the issue lies in the assumption that high-value digital turnover always equates to taxable business without deeper investigation.

The case has now sparked a broader conversation about the gap between policy and ground-level implementation. Traders’ unions have urged the GST Council to provide clarity and relief in such cases, especially when the digital transaction trail supports the tax-exempt nature of the business.

The vendor has submitted explanations and records of his purchases and sales to the GST department and is awaiting a reassessment. He expressed deep distress, saying the notice has not only threatened his livelihood but also discouraged him from using digital payments in the future.

As the case garners public attention, it also raises concerns about the treatment of small vendors in India’s evolving tax ecosystem. A balanced approach that encourages digital inclusion while ensuring fair compliance is increasingly being seen as the need of the hour.


Source:
The Hindu | India Today | Business Standard

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