Mr Manmohan Singh wrote ("Payment Woes Of Cash-Strapped GST-Registered Businesses" The Straits Times 28 May 2014):
[A business that is registered for Goods and Services Tax ("GST") is] effectively an agent
of the Government to collect GST from its customers. It has to submit
the returns and tax due within one month from the end of each
[calendar quarter].
When a customer
delays payment, the burden then rests solely on the GST-registered
business to pay the tax. If the business is cash-strapped and unable
to pay, the consequences can be serious.
The Comptroller of
GST can appoint any bank where the business maintains an account as
an agent to pay the GST due. When this occurs, the bank account of
the business is effectively "frozen" and all payments to
employees and suppliers cannot be made.
The Ministry of
Finance should clarify whether a GST-registered business can enforce
payment of the tax it is merely collecting on behalf of the
Government, and the options available should customers delay payment."
It is one thing if a GST-registered business has collected the GST and does not pay the Comptroller by the due date. It is quite another if a GST-registered business has yet to collect, or has difficulty collecting, the GST but has to pay the Comptroller in advance of receiving payment from his customers.
While the Comptroller should collect all GST due to the Government, requiring businesses to pay GST that is notionally, but not actually, collected puts an unfair burden on businesses.
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