Sole-proprietor Convicted for Unlawful GST Collection

13 May 2015

Mohaideen Bin Osman (“Mohaideen”), 39, sole-proprietor of Formz Design International (“FDI”), was ordered by the Court yesterday to pay a total penalty and fine of $38,589.93 for unlawfully collecting GST amounting to $8,863.31. In addition, Mohaideen has to pay to the Comptroller of GST the total amount of GST that he had unlawfully collected from his customer.

Unlawful Collection of GST
It is a serious offence for businesses that are not GST-registered to charge and collect GST from their customers. Offenders face a penalty of 3 times the amount of tax unlawfully collected and a fine of up to $10,000 for each offence. 

IRAS conducts audits to identify non-compliance with GST laws, including checks on whether businesses charge and collect GST correctly. This case was uncovered in one such audit.

Five individuals and businesses have been convicted in the past for unlawful collection of GST and the total taxes and penalties amounted to $810,000.

Facts of the Offence
FDI, an interior design service provider, was engaged by Agricultural Bank of China (“ABC”) to provide interior design and renovation services. Mohaideen was the sole-proprietor of FDI and he was not a GST-registered person. But he issued 24 tax invoices with GST-inclusive prices to ABC and unlawfully collected GST amounting to $13,155.43 from ABC during the period from April to July 2009. Mohaideen then deposited the amount into FDI’s bank account and used it to pay his sub-contractors. 

Court Sentences
Mohaideen faced a total of 24 charges of unlawful GST collection. He pleaded guilty to eight charges that were proceeded against him. The remaining 16 charges were taken into consideration for sentencing.

The court sentenced Mohaideen to a penalty of $26,589.93, three times the unlawfully collected GST totalling $8,863.31, in addition to a fine of $12,000. In default of paying $38,589.93, he has to serve a total of 50 days of imprisonment.

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. 

Report GST Malpractices to IRAS
Anyone who wishes to report cases of malpractices by businesses can write to:
Inland Revenue Authority of Singapore
Investigation & Forensics Division
55 Newton Road, Revenue House
Singapore 307987
Email: ifd@iras.gov.sg

Cash Rewards for Informant
A reward based on 15% of the tax recovered, capped at $100,000, will be given to informants if the information and/or documents provided lead to the 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 secret and confidential. 
                    

Inland Revenue Authority of Singapore