The Supreme Court of Appeals (SCA) dismissed with costs a request from the South African Revenue Service (Sars) to review a decision in favor of Ficksburg resident Joaquim Alves, whose Nissan Serena truck was seized by customs officials in 2019 on the grounds of that it was being driven in South Africa with Lesotho registration and without the necessary import permit.
Alves’ vehicle was being driven by a friend in the border town of Ficksburg when customs officials stopped the driver and asked to see the import permit.
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Alves rushed to the scene and argued with customs officials that the vehicle was legally registered in Lesotho and therefore no import permit was required. Customs officials seized the vehicle. Believing that the law was on his side, Alves went to the municipal compound and recovered the vehicle.
The next thing he knew, officers from the SA Police Service came to his door and arrested him. He ended up in hospital that weekend due to a pre-existing heart condition, and the following Monday he appeared in Ficksburg Magistrates Court.
The magistrate ordered the release of the vehicle, although Sars did not comply with this order.
Sars without options
Mkhosi Radebe of MC Radebe Attorneys in Pretoria and Bloemfontein, who represents Alves in the case, says that Sars has exhausted all legal options in this case and has been ordered to pay the costs and adhere to the prior order to return the vehicle.
The ruling has some interesting ramifications, says Radebe.
“First of all, it means anyone who drives a car registered in Lesotho, Botswana and eSwatini, all of which are part of the Southern African Customs Union. [SACU], you are free to drive your vehicle unhindered on the roads of South Africa. Second, it means that the Sars has exceeded its powers for years and has never been held accountable, until now. ”
Radebe is planning a class action lawsuit against Sars for illegally impounding vehicles registered in neighboring countries.
In the court action, Alves’ lawyers argued that the Customs and Excise Law and several other laws on which the Sars relied were so poorly written that the tax authority was repeatedly able to override its legal powers.
“Unfortunately, they ran into Mr. Alves, who was determined to bring this to a positive conclusion, which we have already done.”
Alves’ team also argued that the imported vehicle could only enter SACU after paying the corresponding fees at the Durban port and, thereafter, could circulate on SA roads without hindrance.
The ban on importing used vehicles from Japan and elsewhere is intended to support the local auto manufacturing industry. As Moneyweb previously reported, in order to import one of these second-hand vehicles, you need to apply for a permit from the South African International Trade Administration Commission, which is limited to mostly returning residents and immigrants.
The same rules don’t apply to neighboring countries like Lesotho, where imported second-hand vehicles are in plain sight everywhere, and that’s why so many are seen in border towns.
The South Africa International Vehicle Identification Bureau has estimated a loss to the treasury of billions of rand due to illegal imports of vehicles bleeding across the border from neighboring countries.
Pillar to post
Moneyweb approached the Department of Commerce, Industry and Competition for comment and was referred to Sars.
Sars provided the following statement: “In terms of legislation, Sars is prohibited from commenting on confidential tax matters, even if companies or their directors are under investigation or subject to any tax administrative action or any planned action.”
Regarding the likely impact of this decision on the automotive retail market in South Africa, the National Automobile Dealers Association (NADA) says that it is “not in a position to comment on the case without the benefit of being aware of all the documentation and the official facts on this matter. ”
Radebe tells Moneyweb that there has been a noticeable change in the behavior of customs officials, who are less enthusiastic about detailing vehicles with foreign license plates.
“Now we have to get these officials accountable, and that’s what the class action lawsuit will accomplish.”