Tan Kim Teck thought he could shake the IRAS off his trails by burning his business records to destroy evidence of fraud, but IRAS brought him to task for creating false GST claims to defraud the Comptroller of GST. Tan was sentenced to eight months and two weeks’ jail, as well as fined $413,880 in court.

Tan was charged in court with intent to evade tax via TKT Trading to defraud the Comptroller of GST of $219,596.42 in taxes over an eight-year period from 2000 to 2007. He had made fictitious entries in 29 GST returns and failed to keep proper records as required under the law.

IRAS can take tax evaders to task for periods beyond the seven-year statutory time-bar where fraud has been committed.

Tan began his business as the sole-proprietor of TKT in 1996. The principal business of TKT is wholesale of parts and accessories for vehicles. He registered for GST in 1998 and was responsible for submitting the GST declarations for TKT since registration.

Destruction of Evidence

GST-registered persons can offset the GST they pay on their purchases against the GST they charge on sales, and pay the net difference to IRAS. If a business incurs more GST on purchases than it collects from sales, it can claim a refund of the shortfall from IRAS. Refunds can arise in exports, because exports are zero-rated (i.e. the business need not collect GST on exports) but the GST is incurred on purchases.

Businesses can only claim input tax if they have indeed exported the goods, incurred the GST on purchases and also satisfied the essential conditions for making claims.