KOLKATA: India’s export of polished diamonds has lost its sparkle ever since angadias, or couriers, suspended their operations following raids by the authorities earlier this month over suspected tax evasion.
The angadias, who have been ferrying rough diamonds from Mumbai to Surat and polished diamonds from Surat to Mumbai, have decided not to resume work till they get clear guidelines from the government, crippling the trade in the process, some people aware of the matter said.
This came after the departments of goods and services tax (GST) and central excise carried out joint raids in Mumbai on January 4 and said they had detained 85 angadias who were carrying 90 bags containing 1,042 high-value parcels.
“The action against the angadias has completely disrupted trade, particularly exports, said Praveen Shankar Pandya, chairman of the Gem & Jewellery Export Promotion Council (GJEPC). “The raids have caused extensive damage to the trade in general and the angadia community in particular.”
‘Reason for Seizures Unknown’
However, Mumbai GST commissioner, KN Raghavan, told ET that the parcels which had proper documents were released subsequently. “If someone comes with proper documents then we will immediately release the parcels. In case they do not have proper documents they will have to pay the duty and take away the parcel,” he said. “We will intervene whenever there is some wrong practice. The trade should therefore be more cautious and careful,” he said.
The crackdown came at a time when the demand for diamond in the world markets had started picking up. The export of cut and polished diamonds in December 2017 increased 7.68% to $1,592.30 million from $1,478.71million a year ago.
The GJEPC chairman said that while several days had elapsed, it was still unknown why the seizures were carried out, under what powers the seizures were carried out, under what powers the seizures were carried out, and for what breach of the GST laws the seizures were carried out.
“In this connection, it may also be noted that under the GST provisions ( Section 129 of the CGST Act, 2017), only goods being carried in contravention of the GST law would be liable to seizure under the Act, and not for contraventions under any other laws,” Pandya said.
“Ease of doing business in our industry (especially for exports), with the system of the free flow of goods through the angadias, which has subsisted for the last 70 years, must continue without any impediment,” he said. “Free movement of goods through the angadias is a lifeline for sustaining our exports, as well as related employment.”
Veteran diamond traders said that the parcels seized during the raids are being segregated and individual companies are being asked to appear and establish the antecedents of the goods. “This exercise is both disruptive and time-consuming,” said a trader, who did not wish to be identified.
However, Vipul Shah, a former chairman of GJEPC, said: “One of my parcels was among those seized. But after showing valid papers I got back my parcel. If there are proper papers then there should be no problem at all.”
The worst affected, according to Dinesh Navadiya, a former president of Surat Diamond Association, are the medium and small enterprises that have yet to become GST compliant.