A former company director in Singapore was sentenced to seven weeks' jail and ordered to pay S$83,300 for collecting Goods and Services Tax (GST) when his company was not authorised to.

Vijay Kumar Muvva, 48, is the first person in Singapore to be convicted and jailed for this violation, according to a May 29 press release by the Inland Revenue Authority of Singapore (IRAS).

Previously, unauthorised GST collectors would only face a monetary penalty of three times the amount of GST involved, and a fine of up to S$10,000.

The possibility of a jail term was included under new rules that took effect from Jan. 1, 2019.

Allowed company to illegally collect GST

According to court documents, Vijay was the group executive director of Ensoft Consulting at the time of the offences.

The firm provided employment, recruitment and manpower outsourcing services for the information technology (IT) industry.

His wife was also a director of the company.

Sometime in 2016, Vijay discovered that Ensoft was collecting GST even though it was not GST-registered.

Businesses in Singapore that are not registered for GST are not allowed to charge and collect it from their customers.

However, Vijay allowed Ensoft to keep issuing invoices with GST as he was worried that customers might become suspicious otherwise.

Between Jan. 1 to Sep. 12, 2019, Ensoft issued 34 invoices to its customers and collected a total of S$27,766.71 in GST.

His offences were later uncovered during an audit.

Vijay has since made full restitution of the tax collected.

Did not notify authorities that firm was liable to pay GST

Investigations also found another lapse on Vijay's part.

As the value of Ensoft’s taxable supplies for the quarter ending on Dec 31, 2017, and the three preceding quarters, had exceeded S$1 million, the firm was required to register for GST.

However, Vijay failed to notify the Comptroller of GST of Ensoft’s liability to be registered for GST purposes.

This resulted in the company skipping out on paying GST amounting to S$139,612.09.

Failure to register for GST is an offence in Singapore.

Businesses may be required to pay 10 per cent of the GST due as a penalty, and a fine of up to S$10,000.

For this offence, Vijay was ordered to pay a total of S$15,961, which comprises 10 per cent of the GST owed, as well as a S$2,000 fine.

IRAS said that Vijay was "fully aware of GST requirements" since he was the director of another company that was GST-registered.

As a director of the company, the law allows him to be held personally responsible for the company’s offence, unless he can prove that he was unaware of the offence, and that he did his due diligence to prevent it.

His wife's case will be dealt with separately.

Top image from Canva