Angadia case: ED, Income Tax and Customs departments to further probe matter

The team of Goods and Services Tax (GST) and Central Excise departments has now transferred the case against angadias to the the Enforcement Directorate, Income Tax and Customs Department for further probe.

Earlier, a team of officials from the GST and Central Excise departments had conducted raids on several ‘angadia’ operators in Mumbai in a major crackdown on jewellers and traders evading taxes.

Angadias are informal courier and bank services used by diamond and jewellery traders for tax evasion. They act in utmost secrecy as a conduit for transferring diamonds, gems, jewellery and cash, mainly between traders and jewellers.

The officials from GST and Central Excise departments found Rs 4 crore cash in Indian currency and Rs 60 lakh in foreign currency and more than 1,000 parcels in the raid.

The details of the cash and gold bars found in the raids have been shared with the Income Tax, Customs Department and Enforcement Directorate.

A source in the GST department told Moneycontrol: “A large amount of currency was going around from Gujarat to Maharashtra, which is a serious concern. We have transferred the case to other investigation agencies.”

While some of the angadia traders showed proper papers and got their parcels released after the raid, most of the parcels are still lying with the GST department.

GST department has said that it will not release the parcels unless all taxes are paid.

Members of the Gem & Jewellery Export Promotion Council (GJEPC), set up by commerce ministry, are not ready to pay taxes on the parcels.

Another source close to the development told Moneycontrol: “The GST department is ready to co-operate. They even released packets on which duties were paid, in less than 24 hours. However, GJEPC is not ready to pay proper taxes. Now they are claiming these diamonds went only for job work but they are not able to show proof documents for that.”

GST officials estimate tax evasion worth over Rs 300 crore through the angadia route. The department has booked more than 200 angadia operators from Mumbai Central railway station.

In the coming months also, the GST department will intensify enforcement action since some sectors are collecting GST and not making the payments to the department.

The GST department had received a tip-off from various agencies that angadias became active after demonetisation.

Modus Operandi

Mumbai diamond traders send raw diamonds to Surat which are brought back to Mumbai after polishing and finishing. Angadia businesses run on mutual trust and thus the government is not able to track the amount which they have to pay in taxes. The angadias operate as banks and courier services simultaneously.

After demonetisation, government and investigative agencies were under the impression that angadias will be out of business. The angadia hub in Zhaveri Bazaar — Asia’s largest bullion market — was shut for almost a month, but resumed operations after a month. Their main markets are Mumbai, Jaipur, Kolkata and Surat. In Mumbai alone, there are more than 500 anagadia operators.

This is the third instance when angadias were raided by investigative agencies. Earlier in 2008 and 2013, Income Tax department and National Investigation Agency officials conducted raids on their premises.