First Jail Sentence Issued for Unauthorized GST Collection

by | May 31, 2024 | Accounting, Goods and Services Tax, Tech News

In a significant enforcement milestone, the Inland Revenue Authority of Singapore (IRAS) has secured the first conviction involving imprisonment under Section 64A of the Goods and Services Tax Act (GSTA) for the unauthorized collection of Goods and Services Tax (GST).

Case Details:

  • Offender: Vijay Kumar Muvva, former Group Executive Director of Ensoft Consulting Pte Ltd (Ensoft).
  • Offence: Unauthorized collection of GST and failure to notify IRAS of liability for GST registration.
  • Sentence: 7 weeks imprisonment and a penalty of S$83,300 (with a default sentence of 60 days imprisonment if unpaid).

Effective 1 January 2019, Section 64A GSTA mandates severe penalties for individuals who, without reasonable excuse or due to negligence, collect or attempt to collect any amount purported to be GST when not authorized to do so. Conviction under this section carries:

  • A penalty of 3 times the amount of GST wrongfully collected or attempted to be collected.
  • A fine of up to S$10,000, imprisonment for up to 3 years, or both.

Ensoft, an IT industry employment, recruitment, and manpower outsourcing firm, exceeded the S$1 million threshold for taxable supplies by December 31, 2017. This legally obligated the company to notify IRAS of its liability to register for GST by 30 January 2018. Ensoft failed to do so.

Crucially, despite Ensoft not being GST-registered, Vijay Kumar Muvva authorized employees to collect GST from clients. IRAS highlighted that Vijay should have been fully aware of GST registration requirements, as he was also a director of another GST-registered company.

Vijay Kumar Muvva was convicted for both:

  1. Failing to notify the Comptroller of GST (IRAS) of Ensoft’s liability for GST registration.
  2. Unauthorized collection of GST from Ensoft’s clients.

This case marks the first application of the imprisonment provision under Section 64A since its enactment, underscoring IRAS’s commitment to enforcing GST compliance rigorously and the serious consequences for deliberate evasion, including the unauthorized collection of tax.

Source: IRAS, 30 May 2024.