Shaikh v Standard Bank of SA Limited and Another

Mohammed Amin Yusuf Shaikh was the manager of a close corporation, Nexor 188 CC trading as Classic Distributing Company, which imported shoes into South Africa. SARS discovered that Classic had underdeclared the value of imported goods by submitting false invoices, resulting in underpayment of customs duty and VAT. Classic failed to pay the additional amounts assessed. SARS then relied on section 103 of the Customs and Excise Act to hold Shaikh personally liable as a manager and sought recovery of the outstanding customs duty, VAT, forfeiture and interest. SARS appointed Standard Bank, where Shaikh held accounts, as his agent under section 114A of the Customs and Excise Act and issued notices directing the bank to pay over funds held for Shaikh. The bank complied. Shaikh challenged the validity of the notices, arguing that VAT could not be recovered under a notice that referred only to section 114A and not to section 47 of the Value-Added Tax Act.

The appeal was dismissed with costs.

The case confirms that in South African administrative and tax law, an erroneous or incomplete reference to a statutory provision does not invalidate recovery action by SARS where substantive authority exists. It reinforces a substance-over-form approach and provides certainty regarding SARS’s recovery mechanisms for VAT and customs duties.