sars given a wake up call
18 July 2007

A recent appeal court ruling will prevent SARS from dragging its heels in making decisions on the value of seized goods for duty purposes, according to Prč Prinsloo of law firm Shepstone & Wylie.

The supreme court of appeal ordered the Sars commissioner to repay R900 000 plus costs to two companies, Trend Finance and Trend Gear Enterprises, relating to the seizure of shoes imported from China.

The judgment concludes a lengthy legal battle. It began in 1999 when the controller of customs at Cape Town, acting on behalf of Sars, seized three consignments of shoes on the basis that the value was believed to have been under-declared for duty purposes. The shoes were destined for sale at branches of Pep Stores.

The controller demanded more than R1 million in additional duties and value-added tax penalties for the first consignment but made no ruling for the other consignments.

The companies contested the seizure in the Cape high court, which set aside the penalty but confirmed the additional duty for the first consignment. The court ordered Sars to return the money deposited as security for the second and third consignments.

The commissioner appealed the decision and the appeal court ruled in May that the power conferred on Sars to determine the value of imported goods should be exercised within reasonable time. If not, the right to retain the goods or security deposits fell away.  Prinsloo, who works in Shepstone & Wylie's international transport, trade and energy division, said Sars's problem arose after the commissioner made a value determination on the first delivery almost two years after the shoes were seized but failed to do so for the other consignments.

"The importance of this judgment lies in the fact that it sets a precedent for all conduct by the commissioner for Sars that requires the exercise of a power or discretion," she said.

Ronnie Morris,  www.busrep.co.za