How Diamond Traders and Angadias Got the Better of E-Way Bills
Surat’s diamond traders have stated that generating e-way bills put the transportation of valuable goods at risk.
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On 1 February , the e-way billing system which is an auxiliary compliance to the newly enforced tax regime – GST, was supposed to come into effect. Now, the compliance measure is likely to be re-notified in two to three months once the technical glitches are addressed.
Under the new compliance, transporters should carry an e-way bill when moving goods valued at more than Rs 50,000 from one place to another.
However, diamantaires and dealers in Surat – the world's largest diamond cutting and polishing centre – see it as a threat to the movement of valuable stones and jewellery from one location to the other.
Diamond traders have stated that generation of e-way bill from the Goods and Service Tax (GST) portal is unsafe and vulnerable as electronic information is susceptible to hacking, thereby risking the valuable goods in transit.
They had made a representation before the government, asking for an amendment to the e-way billing system. A notification issued by the Department of Revenue on 23 January 2018 removed diamonds and precious gems from the list of goods that require a mandatory e-way bill.
What Purpose Do E-Way Bills Serve?
The purpose of e-way bills is to plug tax leaks. Instead of relying on a bevy of invoices to transfer goods from one corner to the other, e-way bills make life easy by standardising the data pertaining to the transfer of goods and keep a check on tax evasion by tracking the movement of goods. It is a unified, simple system which establishes direct linkage between what is declared and what has been moved.
The new system aims to reduce manual data entry and can be generated by anyone in the value chain. The data generated through the e-way bill system can help understand the transit time issues on various lanes, help in identifying supply chains that operate outside of tax network, promote digitisation and also bring the antiquated transport industry into the GST framework.
Why are Diamond Traders Against E-Way Bills?
The diamond industry in Gujarat rely heavily on Angadias to transport their merchandise. Angadias are the unofficial banking and courier service, sought by diamond traders and small businesses and have been ferrying diamonds, cash and other items across Gujarat and India for well over a century.
However, with the e-way bill being enforced, the diamond trader or the Angadia themselves must upload information of the consignment, mode of transport and other details on the e-way portal. This makes the data susceptible to breach through hacking. Miscreants can use this information to loot the Angadia agent on transit which can result in losses to the tune of crores.
This fear is not unwarranted as there have been instances in the past where Angadia agents were hit by robbers. With the consignment details available on the portal, it becomes much easier for miscreants to target Angadias.
Who are Angadias?
Angadia, literally means on a person’s body, which is how the Angadia agent (courier boy) used to carry parcels to deliver across Gujarat, strapping valuables across their chest. As one of the proprietors of an Angadia firm said under anonymity, “This business is built on trust. They’re called Angadia because earlier the agent used to tie the parcel on his torso with a cloth and transport it to the person he is supposed to deliver it to. Most of our agents are poor and illiterate persons who can be trusted.”
Most Angadias are operated by the Patidar community and have branches across Gujarat and Mumbai. One of the main industries that Angadias cater to is the diamond industry. The market rates for delivering diamonds and jewellery from Surat to Mumbai and back depends on the value of the consignment. The rate is fixed on a percentage; some levy a fixed charge. The business is driven by just one fundamental – faith. The Angadia agent carries the valuables in trains and buses, typically travelling by second class on commuter trains. This helps them keep a low profile.
Tax Evasion and Loopholes in GST
With the implementation of GST, angadias too came under the purview of the new tax regime and now must charge 18 percent tax for their services. Recently, on 4 January 2018, GST and central excise departments carried out a major crackdown on over 200 angadia firms in Mumbai on the suspicion of huge tax evasion by diamond and jewellery firms in Surat, Mumbai, Ahmedabad and Bhavnagar.
Diamond and jewellery parcels to the tune of over Rs 1,000 crore, which were in transit from Surat to Mumbai, were seized by the officials at Mumbai Central railway station, busting tax evasion to the tune of over Rs 300 crore.
Diamond traders buy rough stones in the grey market and get them polished in various cities in Gujarat, where they have small-scale units employing scores of workers. The finished diamonds then find their way to the market through exports.
Although, the raids did not affect the angadias directly, they have stopped accepting delivery of valuable goods, including diamonds and jewellery from traders and manufacturers who do not have GST registration.
The e-way bill has been introduced to fight evasion of GST during the transit of goods.
Government Offers Relief
For the diamond industry, declaring the consignment on the portal with details of transit poses a security problem. To avoid such risks, the diamond lobby made a representation before the Department of Revenue with their concerns. The department soon made suitable amendments to the list of items that do not require e-way bills.
The Quint spoke to Regional chairman of Gems and Jewellery Export Promotion Council (GJEPC) Dinesh Navadiya, he said, “We had appealed to the government to exempt precious stones, semi-precious stones, coloured stones, gold and silver and studded jewellery from the e-way billing system, which was accepted and a notification in this regard was issued by the government.”
He further added, “We follow the jhangad (entrustment note) system with angadias whenever they deliver our goods. The company transacting with an angadia agent must mention the company name and GST number on the jhangad. Besides this, no other information needs to be furnished and there is no need to upload any of this information on the GST portal for generating an e-way bill. Thereby, we have eliminated the risk of mentioning details of the angadia and the mode of delivery, which otherwise would have been susceptible to robbery and looting in transit.”
According to Navadiya, with the GST number mentioned on each jhangad, the scope of evading tax is nullified. He also added that angadias too have made it mandatory for the diamond traders to mention their GST number and company name along with the consignment, else they will refuse to deliver the goods.
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