29 Jul 2011

Suharry Bin Abdullah (“Suharry”), the director of a beverage company, Republic Beverages Company Private Limited (“RBC”) was sentenced to 4 months’ jail and ordered to pay a penalty of $140,023.59 for creating false GST entries and fictitious invoices to defraud the Comptroller of GST. RBC was fined $40,000 and ordered to pay the same amount of penalty.

RBC which started in 2006, is a company that engages in supply and distribution of beverages. False entries in RBC’s GST returns was made by Suharry from March 2008 to August 2008, resulting in net GST refund claims which he was not entitled to. The total amount of false GST claims was $32,158.98.

In addition, Suharry had also created 6 fictitious purchase invoices when IRAS requested for supporting documents. IRAS also uncovered that Suharry had forged the 6 suppliers’ invoices in his attempt to mislead IRAS into thinking his GST refund claims were genuine. The total amount of GST involved for the forged invoices is $20,394.64.

Suharry and RBC faced 8 charges each. Suharry pleaded guilty to 10 of the charges. The remaining 6 charges were taken into consideration for sentencing. Suharry was sentenced to 4 months imprisonment and ordered to pay a penalty of $140,023.59, which is 3 times the amount of tax undercharged.

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.

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.

Source: This article was extracted from the Inland Revenue Authority of Singapore (IRAS) website. Visit www.iras.gov.sg for more information.