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More fraud cases - company director put in jail

16-Nov-2017

Chen Juncun (“Chen”), a director of advertising firm Citrus Lab Pte Ltd (“CL”) and commercial printing firm Citrus Productions Pte Ltd (“CP”), has been convicted of evading Goods and Services Tax (GST) by overstating input tax and making fictitious declarations to enable the companies to claim GST refunds totalling $40,842.37, and failing to account for GST of $5,454.05.

Chen faced a total of eight GST evasion charges for making false claims to wilfully assist the companies to obtain GST refunds that the companies were not entitled to, and for under-accounting GST. He pleaded guilty to three out of the eight GST evasion charges, involving a total GST amount of $26,439.00, with the remaining five charges being taken into consideration for the purposes of sentencing. The Court sentenced Chen to 8 weeks’ jail and ordered him to pay a penalty of $79,317.00, three times the amount of tax undercharged.

GST Law

GST-registered businesses are allowed to offset the GST they pay for their purchases (input tax) against the GST they collect from sales (output tax). The net difference is due to IRAS. Those that incur more GST on purchases than they collect from their sales can claim the difference from IRAS in the form of GST refunds.

Falsified Documents and Fictitious Entries

As a director of CL and CP, Chen voluntarily registered both companies for GST in Feb and Nov 2009 respectively.

IRAS’ audits uncovered that Chen, who was responsible for all the business activities of the companies, had included entirely fictitious transactions between CP and CL for the purpose of claiming input tax credits that the companies were not entitled to. In order to substantiate the fraudulent claims, Chen also submitted to IRAS eight invoices that he had fabricated.

Investigations revealed that from Apr 2010 to Sep 2011, Chen had assisted the companies to evade GST by overstating input tax in the GST returns of both companies and understating output tax in the GST returns of CP. He also made false entries in the GST returns of CL submitted in Jun and Sep 2011, where he declared that CL had made taxable purchases when no taxable purchases were made.

Severe Penalties for Fraudulent GST Claims

It is a serious offence to wilfully submit false GST returns by overstating any input tax or understating any output tax. Upon conviction, offenders may face a penalty of three times the amount of tax undercharged, a fine not exceeding $10,000, and/or imprisonment of up to seven years.

Source: IRAS, 16 Nov 2017               

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