Thrissur: A day after GST raids exposed significant irregularities in the gold jewellery manufacturing units of Thrissur, leading to the seizure of 104kg of unaccounted gold, gold merchants have strongly criticised the authorities, accusing them of targeting Kerala's traditional gold ornament sector.

The All Kerala Gold and Silver Merchants Association (AKGSMA) has claimed that the raids, code-named Operation Torre Del Oro, conducted by the State GST Department were part of an effort to tarnish the reputation of gold merchants and undermine the legally operating traditional gold industry.

"The authorities should focus on raiding gold smugglers and parallel markets instead of targeting firms that comply with GST regulations and file returns," S. Abdul Nasar, the association's state treasurer, told Manorama. "This is merely an eyewash," he added, calling for more scrutiny of illegal activities.

Nasar also alleged that the GST department conducted the raids without transparency, claiming that even their officials were unaware of the operation until the last moment, having been brought to Thrissur under the guise of an excursion. "Kerala trades around 300 tonnes of gold annually. In this context, the seizure of 104kg is being exaggerated to portray it as a major fraud," he pointed out.

Nasar further criticised the raid, stating that the mobile phones and CCTV systems were switched off during the operation, and questioned the method by which the gold was weighed. "They weighed individual pieces of gold instead of measuring them collectively, which raises some doubts," he said. 

Ignoring smugglers and the parallel market
Nasar emphasised that a significant portion of the gold smuggled into India reaches Kerala. According to the state government, the turnover of legal gold businesses in 2021-22 was Rs 1.04 lakh crore, while the parallel black market trade is estimated to be almost double this volume. Despite having the resources and bureaucratic machinery to address these issues, the government has failed to take action against these illicit operations, noted Nasar.

No data from the GST department
According to Nasar, the GST department is unclear about the exact amount of GST collected from the gold sector. When asked for these figures for the 2022-23 and 2023-24 financial years under the RTI Act, the department responded that no official statistics were available. It also revealed that from April 1, 2022, to October 30, 2024, Rs 383 crore was collected from the gold sector.

"How can the department officials allege GST fraud without even knowing the actual GST income from this sector?" he asked.

During the Value Added Tax (VAT) regime, the state collected an average of Rs 700 crore annually from the gold business. With the implementation of the GST system and the turnover crossing Rs 1 lakh crore, the government expects at least Rs 3000 crore in revenue but is receiving less than Rs 1000 crore. The raids were conducted in light of this revenue shortfall.

However, Nasar argued that submitting GST returns already reflects each trader's turnover, making allegations of tax evasion baseless. "This is just an attempt to sabotage the gold trade and vilify traders," he said, warning that merchants are considering protests and legal actions against what they see as unjustified raids.

Nearly 700 officials from the intelligence and audit wings of the state GST department participated in the raids, which were part of Operation Torre Del Oro, the largest raid of its kind in Kerala. The operation began on October 23, 2024, and concluded on the morning of October 24, 2024.