Partner, Employees of Jeweller Charged for Conspiracy to Commit GST Tourist Refund Fraud

1 Mar 2019

A partner and six employees of a retailer, Abiraame Jewellers, have been charged in Court today for abetting claimants in making fraudulent Goods and Services Tax (GST) tourist refund claims.

The partner, Palaniappan Ramanathan (aged 41), and six other employees – Arumugam Chelladurai (aged 48), Kulamani Ganesan (aged 31), Manickavasagam Saravanan (aged 40), Pang Wei Koon (aged 46), Murugesan Saravanan (aged 41) and Shanmugam Sampathkumar (aged 33) – were arrested by investigators of the Inland Revenue Authority of Singapore (IRAS) on 28 Feb 2019. They had issued electronic Tourist Refund Scheme (eTRS) tickets that enabled claimants to fraudulently claim GST cash refunds amounting to approximately $14,353.

The seven accused persons are facing a total of 154 charges for their involvement in the fraud.


Modus Operandi of GST Refund Claim Fraud

In a GST refund claim fraud scenario involving jewellery, a foreign tourist would pay local customers (who are not entitled to the eTRS refund) for their jewellery invoices. With these invoices and using his passport, the tourist would obtain eTRS tickets from the retailer. The tourist would then claim eTRS GST cash refunds at a port of departure using the purchased invoices, the eTRS tickets obtained from the retailer, and a different jewellery which he would have separately prepared. In actual fact, the tourist would not be entitled to the eTRS refund as he was not the actual purchaser of the jewellery referred to in the invoices.

Annex A shows a graphic illustration of how such a GST refund claim fraud scheme typically works.

In May 2016, IRAS commenced investigation on five individuals for suspected fraudulent GST refund claims. The five individuals, who are Indian nationals, were convicted and sentenced in April 2017 for their GST and money-laundering offences. They are currently serving their imprisonment terms.

IRAS also commenced investigations on the suspected abetment of Abiraame Jewellers in the fraud. The seven individuals have been arrested pursuant to these investigations. They have now been charged in Court for assisting the five Indian nationals in claiming fraudulent GST tourist refunds by issuing them eTRS tickets when they were not the actual purchasers of the jewellery.

 

Severe Penalties for Abuse of GST Tourist Refunds Scheme

IRAS takes a serious view of such fraudulent GST refund claims. IRAS will not hesitate to take stern enforcement actions against any individuals and parties involved. Anyone who commits the offence of wilful intent to make a false GST refund claim or, assist any other person to make such false claim faces a penalty of up to 3 times the amount of refund wrongfully claimed and a fine not exceeding $10,000, and/or imprisonment of up to 7 years.

 

Eligibility for a Refund under the Tourist Refund Scheme (TRS)

The TRS is available only to bona fide tourists for the claiming of GST refunds on goods they have purchased and brought out of Singapore. Permanent Residents, or foreigners who have been employed in Singapore in the past six months before the date of purchase, are not eligible for GST refunds under the TRS. For the full list of TRS qualifying criteria and conditions, please refer to the IRAS website.   

It is an offence for a person to obtain GST refunds if the person does not meet the TRS qualifying criteria and conditions. It is also an offence for an individual to assist another person in obtaining fraudulent eTRS refunds, such as by selling one’s receipt or invoice to support the claim.


Reporting of Malpractices

Businesses or individuals are encouraged to immediately disclose to IRAS any past or current malpractices or potential abuses of the GST tourist refund scheme. IRAS will consider such disclosures when deciding the action to be taken. Reports can be made to: 

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

Email: ifd@iras.gov.sg


Inland Revenue Authority of Singapore
     


Annex A


Annex A -Illustration of a Tourist Refund Fraud