Vijay Kumar Muvva (“Vijay”), 48-year-old former Group Executive Director of Ensoft Consulting Pte Ltd (“Ensoft”), is the first to be convicted and jailed for unauthorised collection of GST under section 64A of the Goods and Services Tax Act (Cap 117A, 2005 Rev Ed) (“GST Act”). He was also convicted for the failure to notify the Comptroller of Ensoft’s liability to register for GST.

Vijay was sentenced as follows:

First conviction under the new section 64A(2) of the GST Act

Prior to 1 January 2019, an unauthorised GST collection offence would be committed if a person who was not GST-registered issued an invoice or receipt showing an amount as being GST or as being attributable to GST. This offence was punishable by a penalty of three (3) times the amount of GST so shown, and a fine not exceeding $10,000.

To strengthen prosecution and deterrence against unauthorised collection of GST, section 64A was enacted, taking effect from 1 January 2019. Unauthorised collection of GST is a serious matter and offenders convicted under the new provisions face the possibility of imprisonment terms. In particular, under section 64A(2), where any person, without reasonable excuse or through negligence, collects or attempts to collect any amount as GST or being attributable to GST (regardless of whether the person issued any invoice or receipt), the person shall be guilty of an offence and shall pay a penalty of three (3) times the amount of GST collected or attempted to be collected, and also be liable to a fine not exceeding $10,000 or to imprisonment for a term not exceeding 3 years or to both.

Case highlights

Ensoft was in the business of employment, recruitment and manpower outsourcing for the information technology industry. As Ensoft’s value of taxable supplies had exceeded $1 million by 31 December 2017, it was required to notify IRAS of its liability to register for GST by 30 January 2018. However, Ensoft did not do so even though Vijay was fully aware of GST requirements since he was the director of another company that was GST-registered.

In addition, despite Ensoft not being GST-registered, Vijay authorised his employees to collect GST from his clients.

Vijay, the accused, as the former Group Executive Director of Ensoft, was convicted for committing the abovementioned offences.

Penalties for Non-Compliance

Unauthorised charging and collection of GST

It is a serious offence for businesses that are not GST-registered to charge and collect GST from their customers. On conviction, offenders shall pay a penalty equal to three (3) times the amount which was collected or attempted to be collected, and also be liable to a fine not exceeding $10,000 or to imprisonment for a term not exceeding 3 years or to both.

How to Check if a Business is GST-Registered?

Members of the public can check if a business is registered for GST on IRAS’ website (www.iras.gov.sg) using the business name or business registration number. 

GST Registration

All businesses, including individuals deriving income from their trade, profession or vocation, should closely monitor their income on a calendar year basis to assess if they need to register for GST. If their 12-month taxable turnover has exceeded $1 million at the end of the calendar year, they will be required to apply for GST registration by 30 Jan of the following year. They will be registered for GST on 1 Mar. Additionally, if at any point in time, they can reasonably expect their taxable turnover to be more than $1 million in the next 12 months, they must register for GST within 30 days from the date of their forecast. They will be registered on the 31st day from the forecast date. 

Any business that fails to register for GST is still required to pay GST on all their past transactions from the date the business became liable for GST registration. GST is payable even if the amount was not collected from customers. In addition, failure to register for GST is an offence and businesses may be required to pay 10% of the GST due as a penalty, and a fine of up to $10,000.

IRAS conducts audits to identify non-compliance with GST laws, including checks on whether businesses charge and collect GST correctly.

Reporting of Malpractices

Businesses or individuals are encouraged to immediately disclose any past tax mistakes. IRAS will treat such disclosures as mitigating factors when considering action to be taken. Those who wish to disclose past mistakes or report malpractices can write to:

Inland Revenue Authority of Singapore Investigation & Forensics Division 55 Newton Road, Revenue House Singapore 307987

Email: [email protected]

Cash Rewards for Informants

A reward based on 15% of the tax recovered, capped at $100,000, would be given to informants if the information and/or documents provided lead to a recovery of tax that would have otherwise been lost. All payments are at the discretion of the Comptroller. IRAS will ensure that the identities of informants are kept strictly confidential.

Inland Revenue Authority of Singapore