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Court quashes four of manager’s five GST convictions
24 Feb 2020
Mr Loon Wai Yang, the former manager of a family-run gaming company, has been acquitted of 4 out of 5 GST-related offences involving the over-claiming of GST by his company.
Under the GST Act, the presumption is that all directors and managers of a company have de facto responsibility for any GST offence committed by the company. To rebut the presumption, the director or manager in question must show that he (a) did not consent or connive in the offence and (b) had exercised all such diligence to prevent the commission of the offence as he ought to have exercised, having regard to the nature of his functions in that capacity and to all the circumstances.
At the trial below, Mr Loon’s defence was that he was only in charge of marketing and was not involved in the filing of the GST returns, which were prepared by his sister. The District Judge found that Mr Loon had successfully rebutted the first requirement in showing that he did not consent or connive in the offence. However, as regards the second requirement, the District Judge was not convinced that Mr Loon had “exercised all such diligence” as it was “implausible” for a member of the senior management of a small family-run company such as Mr Loon to have no involvement at all in the filing of the GST returns.
On appeal, the High Court overturned the District Court’s findings in respect of 4 out of 5 charges and noted that there was no evidence that Mr Loon was involved in the filing of the GST returns. The High Court further noted that all the circumstances of the case, including the nature of Mr’s Loon functions in the company, had to be considered in the determination of liability. Since the evidence that Mr Loon was only in charge of marketing was unchallenged, the High Court agreed with the Defence’s submission that “there could be no failure on the part of the appellant in showing any diligence in the doing of what he was not expected to concern himself”. In this regard, it could not be said that Mr Loon had failed to show the requisite diligence when the preparation and filing of the GST returns were not matters that he was expected to concern himself with.
As for the remaining charge, Mr Loon accepted that he had prepared the GST return in respect of that charge by himself, and thus did not argue that the imprisonment term of 3 weeks was manifestly excessive.
The High Court’s decision is helpful for company directors and managers as it is the first clear authority from the High Court that the presumption under the GST Act can be rebutted by company directors and managers showing that they had exercised all due diligence in light of the nature of their functions or roles in the company.
Mr Loon was represented by Mr Abraham Vergis and Ms Bestlyn Loo.
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