Oops, The Tax Tag

LAST fortnight when innumerable Delhi designers received innocent phone calls from what they thought was a female journalist requesting their exact addresses, office/residence numbers, locations of retail outlets, details of shop opening timings and "weekly off day" specifics, they were flattered and volunteered information happily enough. Free publicity in the Diwali season could hardly hurt, they reasoned.

Last Wednesday they did get that publicity. But of the kind that left them smarting from the fallout. In early morning raids simultaneously in Bombay, Bangalore, Delhi, Hyderabad, Calcutta, over 500 income tax sleuths swooped down on 15 fashion designers and one jewellery designer's homes, offices, factories and retail stores stocking their wares. The raids revealed old-fashioned patterns of tax evasion, black money transactions among the new Fash Packwalas. In Delhi a reported Rs 8 crore was seized from Ritu Kumar, a kilo of gold jewellery and Rs 3 lakh in cash from Ritu Beri, design maverick Jatin Kochar was found to have never filed a tax return, Rina Dhaka's accounts were shady, ditto those of Signature store owners Bindiya and Payal Jain and Ogaan owner Kavita Bhartiya. In Bombay design duo Abu Jani and Sandip Kho-sla were reportedly discovered with an unaccounted Rs 2 crore. Thirteen lockers were sealed in Delhi, 17 in Bombay.

"We discovered irregularities everywhere we went," says director general (investigation) S.C. Parija. "There were incomplete sales registers, no purchase vouchers for expensive fabrics, mark-ups of 40 to 60 per cent. Shirts selling for Rs 600 in adjacent shops are selling with them for Rs 2,500. Where's the balance money?" Parija is con-fident of finding out. "They can run but they cannot hide. We intend to collect."

 Parija's was no empty threat. Rumbles of the raids-to-come could be heard earlier this year when fashion choreographers and event managers like Bangalore-based Prasad Bidappa received income tax notices. IT sleuths did their homework well: that included careful perusal of this publication's omnibus report on the industry in April. In a trade where black money rules the roost, taxmen are playing smart by targeting not only designers but also buyers. A Bombay socialite with a closet load of Abu Sandeep outfits was being interrogated on sources of the money splurged on sartorial splendour. Credit card purchases too were being examined with fine-toothed combs

As Bidappa wisecracked: "Designers are only bridesmaids. These guys are looking for the brides. They're the big fish. For instance, an Abu Sandeep trousseau costs at least Rs 30-40 lakh. Taxwalas will want to know where that came from." At week's end panicked designers not yet in the raid-pack were reportedly running around burning cash registers, chartered accountants' phones were ringing off the hook even as frantic socialites were playing dress-down in Diwali dress-up season.

The raids registered 10 on the designer Richter scale. Delhi-based J.J. Vallaya went on television to blame designer woes on the media that had hyped sales turnovers disproportionately. Others like Delhi's Carma store owner Lekha Poddar were more circumspect: "These are the vagaries of a new business. Designers should learn to keep proper books, comply with tax laws. That applies to everybody: Salman Khan, Rohit Bal, me." Trade analyst Darlie Koshy of Delhi's National Institute of Fashion Technology sees parallels in the trajectories of the fashion trade today and the garment export trade of yore: "They writhed like this once for lack of transparency. It's the fashion industry's turn now. It won't change till they learn to become a business rather than a mere cottage industry. It's part of the learning process"

 A process designers seem to be shying away from if the petty infighting about the proposed Fashion Forum formation in the last few months is any indication. The Indian fashion industry has operated at the level of amateurish, gauche, cottage craft as opposed to an organised industry with recognised rulebooks and defined parameters for styling, quality, production, pricing, showcasing and retailing. They may learn lessons from these raids and organise. Or they may not and chug right along like rogue elephants as they have to date. So who would lose? And more importantly who would gain? Bidappa is wry: "Their loss is Sheetal, Big Joe's and Benzers gain. After all it is Diwali time. Raids or no raids, brides have to dress. Never mind if the Trousseau Girls as I call the Suneet Varma, Rohit Bal, Tarun Tahiliani trinity, are closeted with the taxmen." Touche!