• Choon Ng

Sole-proprietor convicted for unlawful GST collection

Mohaideen Bin Osman ("Mohaideen"), 39, sole-proprietor of Formz Design International ("FDI"), was ordered by the Court 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.

Source: IRAS, 13 May 2015


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