Gotcha! Wholesale trader jailed for falsified GST registration

Cheater sentenced to six weeks behind bars and a $300k penalty.

Seow Ming Liang, is the first to be charged for giving false information in the voluntary registration for GST for his business, the Inland Authority of Singapore (IRAS) said in a release. He was also charged for creating fictitious entries in his GST returns to make a fraudulent claim for GST refunds. Seow was sentenced to 6 weeks’ jail and ordered to pay a penalty of $298,011.84.

Seow is the sole-proprietor of Geek Enterprise (formerly known as Etechz Solutions) dealing in wholesale import and export of computer component parts. In 2010, Seow applied to register his business for GST on a voluntary basis. In the GST Registration form, he made a false entry by stating that he would be making taxable supplies of $300,000 in the next 12 months, when he had no reasonable grounds for believing so given that he did not conduct any business at all.

GST-registered businesses can offset the GST they pay on their purchases (input tax) against the GST they collect from sales (output tax), and pay the net 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 of the difference from IRAS.

In his first GST return for the accounting period from 1 to 31 Jul 2010, Seow made false entries in his GST returns, resulting in net GST refund claims of $35,670.39 which he was not entitled to. In addition, Seow had also created two fictitious purchase invoices when IRAS requested for documents to support his claim for GST refunds.

Claiming input tax on fictitious purchases is an offence. Offenders face a penalty of up to 3 times of the amount of tax undercharged and/or imprisonment up to 7 years.

Seow pleaded guilty to 3 charges with one remaining charge taken into consideration for sentencing. Seow was sentenced to 6 weeks’ imprisonment and ordered to pay a penalty of $298,011.84, which is 3 times the amount of tax undercharged.

IRAS reminded that GST registration is compulsory for businesses whose annual taxable turnover has exceeded $1 million, or is expected to exceed $1 million in the next 12 months. Businesses whose taxable turnover does not exceed $1 million may choose to register for GST on a voluntary basis.