A small vegetable vendor from Haveri, Karnataka, named Shankargouda Hadimani, was shocked to receive a GST tax notice of ₹29 lakh.
Shankargouda runs a small vegetable shop near the Municipal High School grounds and has been operating it for the past four years.
Karnataka Vegetable Vendor Shocked by ₹29 Lakh GST Notice Despite Running Small Shop for 4 Years
He primarily accepts digital payments through UPI and other wallets, as most customers prefer cashless transactions.
The GST department issued the notice claiming he conducted ₹1.63 crore worth of transactions over four years, and now owes ₹29 lakh in GST.
Shankargouda stated that he buys fresh vegetables directly from farmers and sells them unprocessed at his shop.
He maintains that he files income tax returns annually and keeps proper financial records.
He expressed concern, saying it’s impossible for him to pay such a large sum, especially given his small-scale business.
According to ClearTax, fresh and unprocessed vegetables are exempt from GST, meaning there should be no tax liability in his case.
The issue stems from his digital payment records, which have drawn scrutiny from GST officials despite his business dealing in tax-free goods.
Karnataka GST Dept Warns Unregistered Traders Exceeding Turnover Limit Will Face Tax Notices
On July 12, 2025, the Karnataka GST department stated that traders who cross the GST registration turnover threshold and fail to register or pay taxes will receive notices.
In response to such notices, many small vendors have stopped accepting UPI payments and are now insisting on cash-only transactions.
On July 17, 2025, the department acknowledged that vendors were shifting away from digital payments to avoid scrutiny.
However, the department warned traders that tax is applicable on the total income, regardless of whether it’s received in cash or digitally.
Officials also mentioned they would take action against those trying to conceal income to avoid taxes.
Stories like Shankargouda’s have sparked concern and confusion among small traders, who feel trapped between going digital and risking unaffordable tax demands.
