How a Pani Puri Seller Received a GST Notice: A Detailed Analysis

Introduction

In a viral incident that amused and shocked social media users, a pani puri seller from Tamil Nadu reportedly received a Goods and Services Tax (GST) notice. The summons, dated December 17, 2024, under Section 70 of the Tamil Nadu GST Act and Central GST Act, alleged that the vendor received online payments totaling ₹40 lakh in the financial year 2023-24 without obtaining GST registration. This case has raised several questions about GST compliance, especially for small business owners.

In this article, we analyze the case, identify the reasons behind the notice, and provide actionable recommendations to help small businesses stay compliant with GST regulations.

What Happened?

The GST notice was reportedly issued based on transaction data collected from digital payment platforms like RazorPay and PhonePe. According to the notice:

• The vendor received significant UPI payments over three financial years (2021-22, 2022-23, and 2023-24).
• The payments for 2023-24 alone amounted to ₹40 lakh, exceeding the GST turnover threshold.
• The vendor allegedly failed to register under GST despite crossing the threshold, which is considered an offense under GST laws.

While the authenticity of the notice remains unverified, the incident highlights the growing reliance on digital payment data by tax authorities to identify potential non-compliance.

Why Did the Pani Puri Seller Receive a GST Notice?

Here are the key reasons behind the notice:

1. Exceeding the GST Turnover Threshold

• GST registration is mandatory for businesses with annual turnover exceeding ₹20 lakh in most states (₹40 lakh for businesses dealing exclusively in goods).
• Receiving ₹40 lakh in digital payments implies that the vendor likely crossed the threshold but failed to register.

2. Increased Scrutiny of Digital Payments

• Payment platforms like RazorPay and PhonePe share transaction data with tax authorities.
• This transparency helps identify businesses with substantial turnovers operating without GST compliance.

3. Failure to Maintain Proper Records

• Even if the ₹40 lakh in payments included expenses and not just profit, lack of proper bookkeeping can make a business appear non-compliant.

Lessons for Small Business Owners

This case is a wake-up call for small businesses, especially those using digital payment platforms. Here’s what you can learn:

1. Understand GST Thresholds

• If your annual turnover exceeds the GST threshold (₹20–40 lakh depending on the type of business), GST registration is mandatory.
• Turnover includes all sales revenue, not just profits.

2. Maintain Accurate Records

• Keep detailed records of income and expenses.
• Proper bookkeeping can help distinguish turnover from profit, making compliance easier.

3. Register for GST When Required

• Register for GST as soon as your turnover nears the threshold to avoid penalties.
• Once registered, ensure timely filing of returns and payment of GST dues.

4. Consult a Professional

• If you’re unsure about your compliance requirements, consult a Chartered Accountant or GST consultant.

5. Monitor Digital Payments

• Track all payments received through digital platforms to understand your turnover.
• Regularly reconcile your bank statements with sales records.

Steps to Avoid GST Notices

1. Track Your Turnover
   
   • Regularly calculate your annual turnover to check if it exceeds the GST threshold.
2. Automate Record-Keeping
   
   • Use accounting software to maintain accurate records of income, expenses, and digital transactions.
3. Stay Updated on Tax Laws
   
   • Keep yourself informed about GST rules and thresholds.
4. Adopt Transparent Business Practices
   
   • Issue proper invoices for all transactions, whether online or offline.
5. File Returns on Time
   
   • If registered under GST, file monthly or quarterly returns as required to avoid penalties.

Final Thoughts

The case of the Tamil Nadu pani puri seller underscores the importance of GST compliance in the digital payment era. Small business owners must recognize the increasing scrutiny of digital transactions and take proactive steps to ensure compliance. Proper bookkeeping, timely registration, and awareness of tax regulations can help avoid such issues.

For expert guidance on GST registration and compliance, reach out to QuickComply. Let’s simplify compliance together!