A company director was convicted in court for making fraudulent GST claims amounting to $482,072.85. Jagbir Singh s/o Baldhiraj Singh (“Jagbir”), the company director of 3D International Pte Ltd faced ten charges for making false claims of GST refunds for the period 1 Jan 2005 to 30 Jun 2007.

Modus Operandi

GST-registered traders can offset the GST they pay for their purchases (input tax) against the GST (output tax) they collect from sales, and pay the difference to IRAS. If a business incurs more GST on purchases (input tax) than it collects from sales (output tax), it can claim a refund. Under the GST law, exports of goods and international services are zero-rated, i.e. traders need not collect GST on the exports. However, a GST-registered trader who exports his goods overseas may still claim the full amount of GST incurred on their purchases.

IRAS’ investigations revealed that the GST input tax reported in ten of the GST returns filed by 3D International Pte Ltd during 1 Jan 2005 to 30 Jun 2007 were largely fictitious, resulting in a fraudulent refund claim of $482,072.85 from IRAS. Jagbir also fabricated the amounts of taxable purchases and supplies in the GST returns.

The GST returns were completed and submitted by his mother, the other director of 3D International Pte Ltd. Investigations showed that Jagbir’s mother had acted under Jagbir’s instructions, not knowing the fictitious GST declarations he had made. Jagbir admitted that he had fraudulently obtained GST refunds from IRAS.

Court Sentencing

Jagbir was found guilty and convicted of four charges of wilfully assisting 3D International Pte Ltd to evade tax, by making false entries in the GST returns under Section 62(1)(b) of the GST Act. He was sentenced to the maximum fine allowed under the law of $10,000 per charge, and therefore a total of $40,000 for the four charges. In default of payment of fine, the total default sentence would be four months of imprisonment.

Also taken into consideration for sentencing were six more charges of wilful intent to assist 3D International Pte Ltd to evade tax, by making false entries in the GST returns of the company.

The Court also ordered a penalty assessed under Section 48 of the GST Act of three times the tax undercharged of $233,678.85 (in respect of the four charges). The total penalty amounted to $701,036.55.

GST-registered traders must not make fraudulent claims

IRAS takes a serious view of GST-registered traders who wilfully make false claims for GST refunds or under-charge GST on sales. IRAS would like to remind all GST–registered traders and any person responsible for making tax declarations that tax evasion and defrauding the government is a criminal offence, punishable under the law. When a person or company deliberately commits tax evasion or fraud, his actions inadvertently affect the society at large, because the tax revenue lost is revenue that could have been applied to other deserving needs.

Voluntary Disclosure Programme

Taxpayers are encouraged to conduct periodic reviews of their GST returns/declarations and disclose any error voluntarily. While IRAS believes the majority of taxpayers are compliant, some taxpayers could have been negligent or unaware of their tax obligations, thus resulting in mistakes. To encourage taxpayers to disclose errors or omissions and to come forward voluntarily in a timely manner, IRAS has reduced the penalty under its Voluntary Disclosure Programme for voluntary disclosures which meet qualifying conditions. The qualifying conditions and further details are listed in IRAS’ e-Tax Guide on “IRAS Voluntary Disclosure Programme” (PDF, 476KB).

In the spirit of encouraging voluntary compliance, IRAS imposes lower penalties for errors disclosed voluntarily by taxpayers. Taxpayers who wish to disclose errors in their GST returns should write to:

The Comptroller of GST
Inland Revenue Authority of Singapore
55 Newton Road, Revenue House
Singapore 307987
Email: [email protected]
Tel. Number: 1800-356 8633
Fax Number: 6351 3553

Issued by the Inland Revenue Authority of Singapore