India's government sales tax department is conducting a probe of a at least 27 firms in Mumbai's diamond industry for allegedly evading some $223.6 million in taxes, the Times of India reports.

According to the Times, a number of diamond traders allegedly manipulated data on diamond imports from Dubai and Hong Kong.

Investigators have reportedly discovered that the shipments of diamonds were labeled as destined for the Surat diamond hub in India's Gujarat state, where transactions in diamonds are exempt from sales tax.

Authorities learned of the alleged tax evasion when a vigilance team conducted raids on two clearing agents and some of the diamond importers' offices.

In November, three Surat diamond traders were fingered for reportedly evading income tax. Investigators raised the traders' offices and seized documents as well as stocks of both rough and polished diamonds.