In a large-scale operation named “Operation Torre del Oro,” the Kerala Goods and Services Tax (GST) department recently conducted extensive raids across jewellery manufacturing units, wholesale outlets, and residences in Thrissur, Kerala.
This two-day operation, which engaged approximately 700 officials, led to the seizure of 104 kg of unaccounted gold, valued at around Rs 75 crore, revealing tax compliance issues within Thrissur’s jewellery manufacturing sector.
Unprecedented Scale of GST Raids
The raids, carried out over multiple locations, was a large-scale operation by the state’s GST department. GST Special Commissioner Abraham Renn S noted that this was the first raid of this scale targeting jewellery manufacturing sites, which generally face less scrutiny than retail outlets. The operation covered 67 locations, including key manufacturing units and the private residences of jewellery business owners, in a bid to address extensive irregularities in billing and tax compliance across the sector.
The strategy involved mobilising approximately 700 officers from the GST intelligence and audit divisions, who gathered at two undisclosed locations and travelled to raid sites in tourist buses to maintain secrecy. “We opted for tourist buses to maintain secrecy; transporting officers in department vehicles could have risked a leak. If the gold traders caught wind of our operation, it could have jeopardised our mission,” noted a senior GST official involved in the operation.
Operational Details and Planning
The operation, named after the Spanish term for ‘Tower of Gold,’ was implemented with the support of the state’s Finance Minister K N Balagopal. The name underscores the focus on tax compliance within Thrissur’s jewellery manufacturing sector, which has drawn scrutiny due to its prominence in India’s gold and diamond jewellery trade. Official sources disclosed that preparations for the raid were meticulous, and steps were taken to minimise the risk of leaks, a tactic that paid off in preventing any forewarning to the traders.
The officials discovered significant default in the billing and taxation processes within the units they inspected. As part of the ongoing investigation, authorities are now verifying the gold seized alongside other documents to establish the full extent of tax evasion involved.
Industry Reaction
The Kerala Gold and Silver Merchants Association has voiced criticism of the raids, arguing that they unjustly depict the sector as rife with tax evasion. The association’s statement read, “The officials are inflating the figures by highlighting the 104 kg of gold seized, which is minimal compared to the gold trading sector’s annual turnover of over Rs lakh crore. Additionally, the raids were conducted with mobile phones and CCTV cameras turned off, disrupting business operations.”
The association further claimed that the GST department’s focus on registered businesses, which already comply with GST norms, is unwarranted when entities engaged in unregistered gold smuggling activities remain unaddressed. They stated, “These raids targeted firms that are GST registered, while no action has been taken against those involved in gold smuggling who operate without any registration.”
Implications for the Jewellery Industry
The Thrissur raids underscore the GST department’s growing focus on compliance in high-value sectors like jewellery manufacturing, where unaccounted assets have been a recurring issue. For jewellers, this operation highlights the increasing scrutiny on billing and tax processes, suggesting that larger manufacturing hubs may see similar enforcement actions in the future. Jewellers are advised to ensure their operations are fully GST-compliant and transparent, as authorities are broadening their focus beyond retail outlets to include manufacturing entities, where the stakes are high and the financial impact of non-compliance can be significant.
