Singapore GST – Company Director Convicted for Unlawful GST Collection

It was reported in IRAS’ website on 19 Jan 2018 that Kumarselvam S/O Veejay Koumar, who was a director of MV Global Trading Pte Ltd, flouted the law when his company unlawfully charged GST on a total of 102 sales invoices issued to its customers.

IRAS’ investigations revealed that MV was not GST-registered and Kumarselvam knew that this is the case.  The offenses were detected only because of IRAS’ efforts in conducting checks on businesses before allowing any business to register for GST. Investigations further revealed that Kumarselvam was the person in charge of managing and overseeing MV’s operations at the relevant time.  He had personally prepared and issued 3 of the 34 sales invoices and instructed his staff to prepare and issue the other sales invoices to customers, which charged the prevailing rate of GST on these sales. The “GST” amount was reflected on the said invoices issued.

As MV was not GST-registered, it did not file any GST returns or account for the “GST” collected from MV’s customers to the Comptroller of GST.

In the end, Kumarsalvam pleaded guilty to the 34 charges proceeded on. For being a director when MV unlawfully charged $3,791.21 as GST, the court sentenced Kumarselvam to a penalty of $11,373.63, which is 3X the amount shown as tax, and a fine totaling $51,000. In default of paying the penalty and fine, he has to serve a total of 125 days’ imprisonment. Another 68 similar charges were taken into consideration in sentencing.

What does this mean to you? 

It is a serious offense for businesses that are not GST-registered to charge and collect GST from their customers. Offenders face a penalty of three times the amount of tax unlawfully collected and a fine of up to $10,000 for each offense.

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

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