- 10.1. Prior to the 11th April 1997, royalty on gemstones paid to State Government was calculated on the basis of sale price at pit's mouth as per the Second Schedule of the MM (RD) Act, 1957. This Act does not define the manner in which such sale price at pit's mouth is to be determined. State Government can formulate the modalities for fixation of this price. There are three ways in which it can be assessed.(a)by auction;(b)valuation by a group of experts including Government approved valuer, and(c)on pre-determined value.10.2The Committee has suggested that the Joint Venture partner/ lessees may not agree to dispose of and Government cannot force them for sale the gemstone produced/purchase by them though open auction. On the other hand, valuation by a Group of Experts as envisaged in 1994 Policy encountered several difficulties particularly in respect of reasonableness of the valuation of the material and delay in valuation. In all fairness of things, valuation should be transparent. But gemstone trading does not lend itself to the type of transparency consistent with public service accountability.Besides, it may not be practical and economically feasible to form a large number of Valuation Committee to value the gemstone on day to day basis for a large number of lessees and trading licence through out the State.10.3The said Committee has, therefore, suggested to assess advance royalty "on-determined pit mouth value basis" and appointed a Sub-committee consisting of Director, Mines and Director, Geology GM (Geology) OMC and one Deputy Director, Geology to suggest the "pit's mouth value" of different grades of various gemstones. The Sub-Committee's recommendations which have been accepted by the State Government for the valuation of different grades of various gemstones taking into account the sale price of gemstones, auctioned in the past by OMC suggested price of GSI and information on this collected from different Gem Trading Agencies are at Annexure-I.10.4A Lessees/Trading Licence will be allowed to dispose of his gemstones in the normal of business. He will pay advance royalty at the rate prescribed by Government of India on the basis of self-assessment at the rate of "pre-determined pit's mouth value" indicated in Annexure-I. The advance royalty will be adjusted when the ultimate sale price is determined under the guideline issued by Government of India/State Government. This kind of advance royalty discipline needs to be enforced since, at present, most of the gemstones are sold outside and State and it might take considerable time and effort to reach a conclusion regarding the sale price on the basis of which royalty would be recovered from the parties. The Government will not put any hindrance in the free movement of goods but can make periodic checks. The pit's mouth value indicated in Annexure-I would be reviewed after a year by a Committee.
