Her Majesty’s Revenue & Customs v Shahdadpuri: MTIC Fraud & Revenue Law
Her Majesty’s Revenue & Customs (HMRC) sued Hashu Dhalomal Shahdadpuri and another in the Singapore High Court, alleging a conspiracy to defraud HMRC through missing trader intra-community (MTIC) fraud. HMRC claimed the defendants facilitated the diversion of VAT payments to Sunico A/S. Andrew Ang J struck out HMRC's claim, finding it was an attempt to enforce UK revenue law in Singapore, and discharged the Mareva injunction. The defendants' application to strike out the claim was allowed, with costs to the defendants.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Claim struck out; Mareva Injunction discharged.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
HMRC's claim against Shahdadpuri for conspiracy to defraud via MTIC fraud was struck out as an attempt to enforce UK revenue law.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Another | Defendant | Other | Claim dismissed | Won | |
| Her Majesty's Revenue & Customs | Plaintiff | Government Agency | Claim struck out | Lost | |
| Hashu Dhalomal Shahdadpuri | Defendant | Individual | Claim dismissed | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Andrew Ang | Judge | Yes |
4. Counsels
4. Facts
- HMRC claimed the defendants were involved in a conspiracy to defraud HMRC through MTIC fraud.
- The alleged fraud involved the diversion of VAT payments properly payable to HMRC.
- The plaintiff claimed to have suffered loss in the sum of £40,391,100.01.
- The defendants negotiated a commission agreement between Sunico and PT Naina.
- Commission payments to PT Naina between October 2002 and July 2006 totalled US$14,764,612.
- HMRC obtained a Mareva injunction in Singapore against the defendants.
- The defendants applied to strike out the plaintiff’s claim.
5. Formal Citations
- Her Majesty’s Revenue & Customs v Hashu Dhalomal Shahdadpuri and another, Suit No 355 of 2010, [2011] SGHC 22
- Her Majesty’s Revenue & Customs v Hashu Dhalomal Shahdadpuri and another, Civil Appeal No 220 of 2010, [2011] SGCA 30
6. Timeline
| Date | Event |
|---|---|
| Council Directive 77/388/EEC issued | |
| Value Added Tax Act 1994 (UK) enacted | |
| Commission Agreement between PT Naina and Sunico signed | |
| Commission Agreement between PT Naina and Sunico took effect | |
| Commission payments to PT Naina began | |
| Commissioners for Revenue and Customs Act 2005 (UK) enacted | |
| Relevant Transaction Chains ended | |
| Commission payments to PT Naina ended | |
| Summons Nos 2437, 2554 and 2559 of 2009 filed | |
| Suit No 355 of 2010 filed | |
| Costs order made in favour of the defendants | |
| Decision Date | |
| Appeal allowed by the Court of Appeal |
7. Legal Issues
- Enforcement of Foreign Revenue Law
- Outcome: The court held that the plaintiff's claim was an attempt to enforce UK revenue law in Singapore and struck it out.
- Category: Substantive
- Sub-Issues:
- Indirect enforcement of foreign revenue law
- Application of the revenue rule
- Related Cases:
- [1928] 1 Ch 877
- [1955] AC 491
- [1955] AC 516
- [2007] QB 846
- [2008] 4 SLR(R) 657
- [1962] SLT 114
- [1989] QB 255
- [1893] AC 150
- [2008] 1 AC 1174
- Tort of Conspiracy
- Outcome: The court found that the claim, though pleaded as a tort of conspiracy, was in substance an attempt to recover UK Value Added Tax extra-territorially.
- Category: Substantive
- Striking Out a Claim
- Outcome: The court struck out the claim pursuant to O 18 r 19 and in the exercise of the inherent jurisdiction of the court.
- Category: Procedural
- Sub-Issues:
- Abuse of court process
- Claim discloses no reasonable cause of action
- Related Cases:
- [1991] 1 SLR(R) 230
- [1970] 1 WLR 688
- [1997] 3 SLR(R) 649
8. Remedies Sought
- Monetary Damages
- Mareva Injunction
9. Cause of Actions
- Conspiracy to Defraud
10. Practice Areas
- Commercial Litigation
11. Industries
- No industries specified
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| In re Visser | Court of Chancery | Yes | [1928] 1 Ch 877 | England and Wales | Cited for the principle that courts will not collect taxes for foreign states. |
| Government of India v Taylor | House of Lords | Yes | [1955] AC 491 | United Kingdom | Cited for the explanation of the revenue rule, which prevents the enforcement of foreign tax laws. |
| Peter Buchanan Ld and Macharg v McVey | House of Lords | Yes | [1955] AC 516 | United Kingdom | Cited for the principle that courts will not enforce foreign revenue laws, even indirectly. |
| Mbasogo and another v Logo Ltd and others | Court of Appeal | Yes | [2007] QB 846 | England and Wales | Cited for the principle that courts will not lend their aid to the assertion of sovereign authority by one state in the territory of another. |
| Relfo Ltd (in liquidation) v Bhimji Velji Jadva Varsani | High Court | Yes | [2008] 4 SLR(R) 657 | Singapore | Cited for the principle that both direct and indirect enforcement of a foreign state’s revenue laws are prohibited. |
| Metal Industries (Salvage) Limited v Owners of the S.T. “Harle” | Court of Session | Yes | [1962] SLT 114 | Scotland | Cited for the principle that the characterisation of a claim is to be made in accordance to the lex fori. |
| United States of America v Inkley | Court of Appeal | Yes | [1989] QB 255 | England and Wales | Cited for the principle that the consideration of whether a claim involves the assertion of foreign sovereignty is to be determined according to the criteria of English law. |
| Huntington v Attrill | Privy Council | Yes | [1893] AC 150 | United Kingdom | Cited for the principle that the court must determine for itself the substance of the right sought to be enforced. |
| Revenue Commissioners v Total Network SL | House of Lords | No | [2008] 1 AC 1174 | United Kingdom | Distinguished. Cited regarding characterisation of claims in MTIC fraud cases, but found not directly applicable due to differences in the facts and the legal issue being considered. |
| Bank of China v Asiaweek Ltd | Court of Appeal | Yes | [1991] 1 SLR(R) 230 | Singapore | Cited for the principle that a case is plain and obvious does not depend upon the length of time it takes to argue. |
| Drummond-Jackson v British Medical Association and others | Court of Appeal | Yes | [1970] 1 WLR 688 | England and Wales | Cited for the principle that the power to strike out a statement of claim as disclosing no reasonable cause of action is a summary power which should be exercised only in plain and obvious cases. |
| Gabriel Peter & Partners (suing as a firm) v Wee Chong Jin | Court of Appeal | Yes | [1997] 3 SLR(R) 649 | Singapore | Cited for the practice of the courts that, where an application for striking out involves a lengthy and serious argument, the court should decline to proceed with the argument unless it is satisfied that striking out will obviate the necessity for a trial or reduce the burden of preparing for a trial. |
13. Applicable Rules
| Rule Name |
|---|
| Rules of Court (Cap 322, R5, 2006 Rev Ed) |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Value Added Tax Act 1994 (c 23) (UK) | United Kingdom |
| Commissioners for Revenue and Customs Act 2005 (c 11) (UK) | United Kingdom |
| Bill of Rights (1689) (c 2) (UK) | United Kingdom |
15. Key Terms and Keywords
15.1 Key Terms
- Missing Trader Intra-Community Fraud
- MTIC Fraud
- Value Added Tax
- VAT
- Revenue Rule
- Mareva Injunction
- Output Tax
- Input Tax
- Carousel Fraud
- Lex Fori
15.2 Keywords
- MTIC fraud
- revenue rule
- VAT
- Singapore
- HMRC
- conspiracy
- tax
- enforcement
- foreign law
17. Areas of Law
16. Subjects
- Tax Law
- Revenue Law
- Conflict of Laws
- Civil Procedure
- Fraud