Hefty fine for SARS over customs clearing dispute
The SCA has imposed a substantial fine on the SARS. The 3 July ruling clarified that SARS cannot issue tax demands without thoroughly considering the evidence, providing proper explanations, and adhering to fair administrative procedures.
This decision stemmed from a case involving SARS and a customs clearing agent, QI Logistics.
BusinessTech reports that the court ruled in favour of QI, overturning the SARS Commissioner’s decision that held QI liable for over R35m related to fuel shipments transported from Mozambique to Zimbabwe and Botswana.
The court found that SARS had failed to adequately consider the evidence presented by QI and did not offer sufficient reasons for its decisions, which rendered the process procedurally irrational.
In August 2024, the Gauteng High Court (Johannesburg) dismissed QI’s application, ruling that under the relevant legislation, liability hinged on whether the clearing agent could meet the statutory requirements to prove that the goods were duly exported.
BusinessTech reports that it determined that QI failed to demonstrate compliance with these requirements and upheld SARS’s demand for all taxes and the forfeiture of the goods.
Van der Merwe and Hunkin noted that a key element influencing the court’s decision was SARS’s failure to provide reasons as mandated by section 5 of the Promotion of Administrative Justice Act.
The SCA emphasised that the absence of justification further indicated that the commissioner had not properly considered pertinent evidence or adequately exercised the discretion allowed under the Act.
The court differentiated between the liability for customs duties and the separate decision to demand an amount for forfeiture under section 88(2) of the Act.
While duty liability may arise automatically if statutory requirements are met, the forfeiture provision grants SARS discretionary power.
The SCA found no evidence that SARS took relevant factors into account, sought representations from QI, or evaluated whether a forfeiture-related demand was warranted.
In light of these findings, the SCA overturned the demand upon review, ordered costs, and referred the case back to SARS.
Partners Quintus van der Merwe and Taryn Hunkin from Shepstone & Wylie explained the reasons behind the SCA’s decision.
BusinessTech notes that they said a decision-maker must allow a party adversely affected the opportunity to be properly heard, and must then consider the information before reaching a decision.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.
