The Commissioner for the South African Revenue Service (SARS) v A Saleem

The respondent claimed to be the owner and manager of a clothing retailer called Payless Fashions in Brakpan, Gauteng. In September and October 2006, SARS officers (Van der Merwe and Jansen) seized approximately R1.2 million worth of goods from the premises, believing them to be imported goods for which no import duty had been paid. The officers found that the vast majority of clothing, shoes and bags were labelled "Made in China" with Chinese inscriptions. When asked to produce import documentation or invoices, the respondent claimed goods were purchased for cash from retailers or wholesalers in Chinatown and Fordsburg. He produced only two or three invoices which lacked proper descriptions of goods and buyer information. The goods were initially detained on 29 September 2006, and the respondent was given until 3 October to produce supporting documents. On 2 October, the respondent introduced Mr Chen as the owner, who produced about ten invoices with similar deficiencies. Chen provided a VAT number registered to Mr G Char and an income tax number registered to Mr Py Lu. On 3 October, a seizure notice was served, and on 5 October all goods marked as imported from China were seized and removed. The respondent applied to the High Court, Pretoria, for an order declaring the seizure unlawful and for return of the goods. Van Rooyen AJ granted the order, finding the seizure unlawful.

• Whether SARS officers had reasonable grounds to detain and seize goods under sections 88(1)(a) and 88(1)(c) of the Customs and Excise Act 91 of 1964
• What constitutes a reasonable suspicion that goods are liable to forfeiture under the Customs and Excise Act
• Whether the officer was required to undertake further investigation before seizing goods, including accompanying the respondent to his alleged suppliers
• What obligations rest on traders under sections 101 and 102 of the Customs and Excise Act to maintain and produce books of account and supporting documents
• Whether the seizure of goods constituted lawful administrative action in conformity with the Constitution and the Promotion of Administrative Justice Act 3 of 2000

The appeal was upheld with costs, including costs of two counsel. The order of the High Court was set aside and replaced with an order dismissing the application with costs.

A SARS officer has reasonable grounds to seize goods under section 88(1)(c) of the Customs and Excise Act 91 of 1964 where: (1) goods bear indications of foreign origin; (2) the trader fails to produce books of account and supporting documents as required by sections 101 and 102 of the Act showing lawful importation or purchase from lawful importers; (3) the trader engages in suspicious conduct; and (4) neither the trader nor purported owner contends the goods are locally manufactured. An officer is not required to accompany a trader to alleged suppliers to verify claims of lawful purchase where the trader has failed to discharge the statutory obligation to maintain and produce proper documentation. The statutory provisions requiring traders to maintain books of account and documents are designed to facilitate policing of importation, and failure to produce such documentation, combined with other suspicious circumstances, provides reasonable grounds for seizure.

Combrinck JA expressly stated that the judgment does not attempt to lay down set guidelines for future conduct of SARS officials when exercising powers under the Act, as the facts and circumstances of each detention and seizure differ. The Court emphasized that administrative powers must be exercised fairly and reasonably in accordance with the purpose and spirit of the Constitution and with due regard to the rights of the individual. The Court also noted that the seizure of goods is a serious matter which impacts upon both privacy and dignity, echoing the High Court's observation, though reaching a different conclusion on the facts. The Court's decision to award costs of two counsel was based on the case being an important one for SARS dealing with the conduct and duties of its officials.

This case is significant in South African revenue law as it clarifies the powers and duties of SARS officials when seizing goods under the Customs and Excise Act. It establishes the threshold for "reasonable grounds" required for detention and seizure of goods suspected to be illegally imported. The judgment emphasizes the importance of statutory obligations placed on traders under sections 101 and 102 to maintain proper books of account and supporting documents, and confirms that these provisions are essential tools for policing importation. The case reinforces that while administrative powers must be exercised fairly and reasonably in accordance with the Constitution and PAJA, officials are not required to undertake investigative steps beyond what is reasonable when traders fail to discharge their statutory obligations to produce documentation. The judgment also demonstrates proper application of the Plascon-Evans rule in motion proceedings where a respondent fails to file a replying affidavit.