Director Jailed for Tax Evasion

A Bay of Plenty company director was today jailed for four years jail for tax evasion of more than $700,000

Harbhajan Singh Kahlon was earlier found guilty in Tauranga District Court of 23 charges of GST-related tax fraud and later admitted a further 46 charges of tax evasion involving PAYE.

The Inland Revenue Department said in a statement today that Kahlon's business was to supply labour for vine management, squash picking and kiwifruit picking in and around Tauranga, Te Puke and Palmerston North.

The scam involved Kahlon, as head contractor and director of his company Kalgidhar Enterprises, engaging 39 sub-contractors as "invoice writers", to supply him with false documents to falsify GST returns filed with the IRD.

Falsified documents helped to create a paper trail when Kahlon and his company claimed extra tax credits, as well as evading the assessment and payment of GST by submitting invoices for work purported to have been sub-contracted out when it was not, or for work never done.

IRD said that over a four-year period, $2,814,096.052 worth of false invoices were rendered to support filed GST returns, which created total losses to Inland Revenue of just over $306,000 worth of GST.

Inland Revenue's investigations and Companies Office records had revealed the purported subcontractors had all been struck off the register, stopped trading or had not had assets in the first place.

In addition to these charges, IRD said that about 90 percent of the $3 million was paid to Kahlon's employees but with a PAYE loss of about $400,000- which gave Kahlon a tax advantage.

Workers who were not having tax deducted were able to avoid legal responsibilities such as child support and student loan payments.