Karnataka traders halt tea, coffee and milk sales to protest GST notices

Small traders across Karnataka—including bakeries, tea stalls, and condiment shops—suspended the sale of tea, coffee, and milk on July 23, wearing black badges in a symbolic protest against GST notices issued by the Commercial Tax Department based on UPI data from FY 2021‑22 to FY 2024‑25.

Vendors switched to cash-only payments and displayed "No UPI" signs, highlighting their fear of receiving large tax demands.

Authorities used UPI and digital payment records to identify traders with turnover exceeding ₹20 lakh for services or ₹40 lakh for goods. More than 1 lakh notices were reportedly sent, sparking anxiety among small vendors.

Vegetable seller Shankargouda Hadimani from Haveri revealed he received a GST notice demanding ₹29 lakh in tax after UPI transactions totaling ₹1.63 crore—even though fruits and vegetables are GST-exempt.

Labour activist Ravi Shetty said many outlets offered only black tea and coffee as a form of protest, with black badges symbolizing vendor solidarity.

Abhilash Shetty from the Karnataka Street Vendors Association highlighted the disproportionate impact of sudden tax demands on low-margin traders.

Chief Minister Siddaramaiah called a meeting for July 23 evening with small trader representatives to address their concerns and explore solutions.

Trader groups have issued a call for a statewide bandh on July 25 if their demands for withdrawal of notices and simplified enforcement are not met.

In Mysuru and Bengaluru, several shopkeepers reported customers abandoning purchases when asked to pay in cash. Trade bodies warn this could reverse the gains of India’s digital payment push and erode consumer trust.

They urge more transparent communication, education on GST rules, and a dedicated grievance mechanism to prevent undue hardship.