A High Court has quashed four out of five convictions of a company manager for offences that involved the under-declaring of the goods and services tax (GST) or over-claiming of GST refunds.

Loon Wai Yang, 40, who had appealed against his sentence of eight weeks in jail and a $433,090 fine by the State Courts last year, will now be left with a three-week jail term and a $123,757 fine for the fifth conviction, which the High Court upheld.

Justice Chua Lee Ming said that "there was no evidential basis that (Loon) had some involvement in the filing of the GST F5 returns such that he could and ought to have done something more to prevent the commission of the offences in the first to fourth charges".

On the contrary, the evidence showed he had proven, on a balance of probabilities, that he exercised the necessary diligence set out in Section 74(1)(b) of the GST Act, Justice Chua added in decision grounds last Tuesday.

The High Court's decision helped to clarify for company directors and managers the potential criminal liabilities under the GST Act, which the court held depends on the circumstances in the light of the manager's role in the company.

Loon, as manager of a company that is involved in data communication services and software development, was charged in relation to GST returns for five quarterly accounting periods that contained false entries between 2006 and 2008.

This led to the undercharging of GST or overclaiming of GST refunds worth a total of $144,363.52.

The charges in the State Courts were brought under Section 62(1)(b) read with Section 74(1) of the GST Act.

The prosecution had said then that no known cases had been prosecuted under these two sections of the GST Act and they involve the consent, connivance and failure to exercise diligence to prevent the tax evasion.

Investigations showed that there was a huge disparity in the amount of gross purchases reported in the company's GST F5 returns and the actual amount that was supported by valid documents.

The prosecution argued that Loon, as the company's manager and vice-president, could not show that the offences were committed without his consent or connivance, and that he showed no diligence in preventing the offences.

He was convicted last March and appealed to the High Court, where his lawyers Abraham Vergis and Bestlyn Loo argued that he did not consent or connive as he was not involved in the filing of the returns.

He was also not in charge of finance, which his adopted sister had taken over since 2005, they said.

Deputy Public Prosecutor Jordon Li appeared for the respondent.

Justice Chua held that the question was whether Loon had exercised all the requisite diligence to prevent the commission of the offences.

He explained that all the circumstances of the case, including his functions, had to be considered.

He also ruled that just because the company was a small, family-run business does not mean there was no demarcation of roles.

The judge held that the evidence showed it was likely Loon was not involved in, and had no oversight over, the preparation or filing of the GST F5 returns in question.

Justice Chua noted that Loon was the declarant for several of the company's GST F5 returns filed between 2002 and 2005.

But he ceased to be involved in GST filings after he resigned as director in 2005 and his sister took over the finance function and handled the company's accounts and GST filings.

"It could not be said that (Loon) had failed to show the requisite diligence when the preparation and filing of the GST F5 returns were not matters that he was expected to concern himself with."

The evidence did not show he had any reason to suspect there was something wrong with the returns.

The judge, however, dismissed Loon's appeal against the fifth charge on the GST F5 return for the first quarter of 2008, which Loon had prepared.

Loon claimed the sums in the GST F5 return were honest mistakes not intended to evade tax but the court found the disparity between the value of purchases claimed by the company ($643,014.12) and the value verified by the Inland Revenue Authority of Singapore ($12,371.65) was too large to be treated to a mistake.

"Clearly, he could not rebut the presumption against him under S 74(1) GSTA since he could not prove the offence had been committed without his consent," said Justice Chua, referring to the GST Act.