Pahad Shipping CC v The Commissioner for the South African Revenue Service

Pahad Shipping CC imported goods into South Africa using the services of Al Ajwad International LLC, a Dubai-based entity. In addition to the invoiced purchase price, Pahad Shipping paid amounts described as bank charges, postage, finance costs, interest, and a 5% amount labelled as 'finance charges'. SARS determined that the 5% finance charges constituted a commission (specifically a confirming commission) that formed part of the transaction value of the imported goods under the Customs and Excise Act 91 of 1964, resulting in underpaid customs duty, VAT, and penalties. Pahad Shipping disputed this determination, contending that the 5% charges were purely finance charges unrelated to the transaction value of the goods, and that the written agreement with Al Ajwad did not reflect the true nature of their relationship. The High Court rejected Pahad Shipping’s version and dismissed the appeal. Pahad Shipping then appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The High Court’s order was set aside and replaced with an order adjourning the application for the cross-examination of Mr Nassim Pahad, directing that rule 35 discovery apply, and postponing the determination of costs to the adjourned hearing.

The case is significant for clarifying that appeals against SARS determinations under section 65 of the Customs and Excise Act are appeals in the wide sense, permitting a full rehearing on the merits. It also reinforces procedural fairness in motion proceedings, emphasising that where serious credibility disputes arise, courts should allow cross-examination rather than deciding the matter solely on affidavit.