24 Jul 2009

A sole-proprietor was charged in court this morning for making false claims of GST refunds from 7 August 2008 to 31 December 2008.

Mr Muhamad Sazali Bin Mohd Salleh (“Sazali”), the sole-proprietor of Syaz Food Services (“Syaz”) was charged for fraudulently claiming GST refunds amounting to $122,182.48 from IRAS.

Modus Operandi

GST-registered businesses can offset the GST they pay on their purchases against the GST they charge on sales, paying the difference to IRAS. If a business incurs more GST on purchases (input tax) than it collects from sales (output tax), it can claim the difference as GST refund from IRAS. GST on goods exported is zero-rated i.e. the business needs not collect GST on exports.

IRAS’s investigations revealed that Sazali had made fictitious input tax claims in his GST returns when there were neither sales nor purchases made as Syaz did not carry out any business activities. Sazali had falsely declared sales and purchases as well as input tax and output tax in the GST returns so as to obtain refunds of GST which he was not entitled to.

Sazali admitted that he had obtained fraudulent GST refunds from IRAS to pay off his outstanding car loan.

Court Sentences

Sazali pleaded guilty to 4 charges of wilfully evading tax by making false entries in his GST returns, an offence under section 62(1)(b) of the GST Act.

His sentences are as follows: -

Charge No. Summons No. Amount Imprisonment term Sentencing to run
1 IRA 000169-2009 $20,314.07 3 months Consecutively
2 IRA 000170-2009 $20,219.29 3 months Consecutively
3 IRA 000171-2009 $24,417.75 3 months Consecutively
4 IRA 000172-2009 $57,231.37 3 months Consecutively
  Total tax undercharged $122,182.48    
  Total Penalty
(i.e. three times the tax undercharged) 		S$366,547.44    

GST-registered businesses must not make fraudulent claims

IRAS takes a serious view on GST-registered businesses that wilfully make false claims for GST refunds or under-charge GST on sales. IRAS would like to remind GST–registered businesses and any person responsible for making tax declarations that strong deterrent measures including prosecution will be taken against those traders who wilfully defraud GST.

Taxpayers are also encouraged to conduct reviews and disclose errors voluntarily. In the spirit of encouraging voluntary compliance, IRAS imposes lower penalties for errors disclosed voluntarily by taxpayers. Taxpayers who wish to disclose any GST errors made 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 Inland Revenue Authority of Singapore