Her Majesty’s Revenue & Customs v Hashu Dhalomal Shahdadpuri: Conspiracy & MTIC Fraud

Her Majesty’s Revenue & Customs appealed against the High Court's decision to strike out their claim against Hashu Dhalomal Shahdadpuri and Notandas s/o Premchand Jamnadas Udasi for conspiracy to defraud through Missing Trader Intra-Community (MTIC) fraud. The Court of Appeal allowed the appeal, finding that it was not plain and obvious that the Appellant’s claim was a claim for unpaid output tax and/or a claim arising out of acts jure imperii and/or involving the enforcement of a foreign governmental interest.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Appeal regarding a claim of conspiracy to defraud Her Majesty’s Revenue & Customs through MTIC fraud. The court allowed the appeal, finding the claim not plainly unsustainable.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Her Majesty's Revenue & CustomsAppellantGovernment AgencyAppeal AllowedWon
Hashu Dhalomal ShahdadpuriRespondentIndividualAppeal DismissedLost
Notandas s/o Premchand Jamnadas Udasi @ Nari PremchandRespondentIndividualAppeal DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Chan Sek KeongChief JusticeYes
Andrew Phang Boon LeongJustice of the Court of AppealNo
V K RajahJustice of the Court of AppealNo

4. Counsels

Counsel NameOrganization
Lim Wei LeeWongPartnership LLP
Joy TanWongPartnership LLP
Andre ManiamWongPartnership LLP
Sim Hui ShanWongPartnership LLP
S SuresshHarry Elias Partnership LLP
James LinHarry Elias Partnership LLP
Chopra Sarbjit SinghLim & Lim

4. Facts

  1. The Appellant, Her Majesty’s Revenue & Customs, is responsible for managing VAT in the UK.
  2. The Respondents are alleged officers and agents of PT Naina Exim Indo, an Indonesian company.
  3. The Appellant’s claim concerns conspiracy by unlawful means to defraud the Appellant through MTIC fraud.
  4. A Danish company, Sunico, was alleged to be the chief perpetrator of a series of MTIC frauds.
  5. PT Naina allegedly introduced some of the EU Suppliers to Sunico and was paid a percentage of Sunico’s profits as commission.
  6. The Appellant claimed that the commission agreement and the commission payments to PT Naina were not genuine commercial transactions.
  7. The Appellant obtained a Singapore Mareva Injunction against the Respondents on 18 May 2010.

5. Formal Citations

  1. Her Majesty’s Revenue & Customs v Hashu Dhalomal Shahdadpuri and another, Civil Appeal No 220 of 2010, [2011] SGCA 30
  2. Her Majesty’s Revenue & Customs v Hashu Dhalomal Shahdadpuri and another, , [2011] 2 SLR 967
  3. Her Majesty’s Revenue & Customs v Shahdadpuri, , [2010] 5 HKLRD 690

6. Timeline

DateEvent
Sixth Council Directive of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes
Value Added Tax Act 1994 (UK)
Commission payments to PT Naina began
Commission payments to PT Naina ended
Appellant obtained the Singapore Mareva Injunction against the Respondents
Appellant applied for an interim injunction in aid of the English Action
Respondents applied to discharge the Singapore Mareva Injunction and to strike out the Appellant’s claim
Appellant filed its amended statement of claim
Judge allowed the Respondents’ striking-out applications and struck out the Appellant’s amended SOC
Appellant requested a further hearing before the Judge
Appellant's further arguments heard
Appellant’s Case dated 28 February 2011
Court of Appeal allowed the appeal

7. Legal Issues

  1. Revenue Rule
    • Outcome: The court held that it was not plain and obvious that the Appellant’s claim was a claim for unpaid output tax and/or a claim arising out of acts jure imperii and/or involving the enforcement of a foreign governmental interest.
    • Category: Substantive
    • Sub-Issues:
      • Enforcement of foreign revenue law
      • Recovery of unpaid output tax
      • Acts jure imperii
      • Enforcement of a foreign governmental interest
    • Related Cases:
      • [2008] 1 AC 1174
      • [2010] 5 HKLRD 690
      • (1988) 165 CLR 30
  2. Striking Out
    • Outcome: The court held that it was not a plain and obvious case for striking out the Appellant's claim.
    • Category: Procedural
    • Sub-Issues:
      • No reasonable cause of action
      • Abuse of process
    • Related Cases:
      • [2009] 2 SLR(R) 814
      • [1997] 3 SLR(R) 649

8. Remedies Sought

  1. Damages
  2. Mareva Injunction

9. Cause of Actions

  • Conspiracy by unlawful means
  • Fraud

10. Practice Areas

  • Commercial Litigation
  • Tax Litigation

11. Industries

  • No industries specified

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Her Majesty’s Revenue & Customs v Hashu Dhalomal Shahdadpuri and anotherHigh CourtYes[2011] 2 SLR 967SingaporeDecision from which this appeal arose.
Revenue and Customs Commissioners v Total Network SLHouse of LordsYes[2008] 1 AC 1174United KingdomCited for the principle that a conspiracy claim for MTIC fraud is not a prerogative claim for tax, but a private law claim for damages for conspiracy.
Her Majesty’s Revenue & Customs v ShahdadpuriHong Kong Court of First InstanceYes[2010] 5 HKLRD 690Hong KongCited for the principle that a claim similar to the present action was not a claim for tax and did not offend the revenue rule.
Her Majesty’s Attorney-General in and for the United Kingdom v Heinemann Publishers Australia Proprietary Limited and anotherHigh Court of AustraliaYes(1988) 165 CLR 30AustraliaCited regarding the central interest of the Appellant in bringing the Present Action.
Wing Joo Loong Ginseng Hong (Singapore) Co Pte Ltd v Qinghai Xinyuan Foreign Trade Co Ltd and another and another appealCourt of AppealYes[2009] 2 SLR(R) 814SingaporeCited for the law on striking out a claim under Order 18 rule 19 of the Rules of Court.
Gabriel Peter & Partners (suing as a firm) v Wee Chong Jin and othersCourt of AppealYes[1997] 3 SLR(R) 649SingaporeCited for the law on striking out a claim pursuant to the inherent jurisdiction of the court.
Lonrho plc v Fayed (No 5)Court of AppealYes[1993] 1 WLR 1489England and WalesCited for the principle that an action brought for a collateral purpose may be struck out as an abuse of process.
Regalway Care Limited (in liquidation) v Abdul Malik Shillingford (also known as Abdul Malik), AVAH Trading Limited, Victoria Clarke, EBST Limited and Imad Yacoub Shoubaki (First Touch Communications Limited, Direct Communication UK Limited and Vita Moderna Limited, interveners)English High CourtYes[2005] EWHC 261England and WalesCited for the principle that one or more of the ‘Buffers’ can be innocent of any involvement in the fraud.
Revenue and Customs Commissioners v Total Network SLEnglish Court of AppealYes[2007] 2 WLR 1156England and WalesCited for the observation that the loss crystallises when the trader who exports the goods from the United Kingdom makes a repayment claim.

13. Applicable Rules

Rule Name
Rules of Court (Cap 322, R 5, 2006 Rev Ed)

14. Applicable Statutes

Statute NameJurisdiction
Value Added Tax Act 1994 (c 23) (UK)United Kingdom

15. Key Terms and Keywords

15.1 Key Terms

  • Missing Trader Intra-Community fraud
  • MTIC fraud
  • Output tax
  • Input tax
  • Revenue rule
  • Mareva Injunction
  • Unlawful means conspiracy
  • VAT
  • Exporter
  • UK Importer
  • Buffer
  • Third-Party Recipient

15.2 Keywords

  • MTIC fraud
  • VAT
  • revenue rule
  • conspiracy
  • Singapore
  • tax
  • fraud

17. Areas of Law

Area NameRelevance Score
Revenue Law90
Conspiracy by Unlawful Means80
Fraud and Deceit70
Mareva Injunctions60
Commercial Fraud60
Income taxation50
Asset Recovery40
Contract Law30
Asset Protection30
Litigation30
Anti-suit injunction20
Contempt of Court20
Abuse of Process20
Trade Finance20
Banking and Finance20
Arbitration10

16. Subjects

  • Tax Fraud
  • International Tax Law
  • Civil Litigation
  • Revenue Law