The Tax Administration Act (TAA) permits the warrantless search and seizure of a taxpayer’s property by the South African Revenue Service (Sars). However, this has been under scrutiny for many years because of its potential to infringe the right to privacy in the Constitution.
The recent case Bechan and Another v SARS Customs Investigations Unit and Others highlighted this matter and the circumstances under which such procedures may be carried out.
In this case, Sars was issued with a warrant in terms of sections 59 and 60 of the TAA, which authorised them to seize information and documentation at the premises of a particular taxpayer.
On arriving at the taxpayer’s premises to execute the warrant, Sars was delayed access to the office park in which the premises of the taxpayer were located. While waiting and attempting to gain access to the office park, Sars noticed several people carrying items from the taxpayer’s office and placing them in the vehicles in the parking lot.
Some hours later, Sars was granted access to the premises. Besides finding the directors of the taxpayer, they also encountered Bechan on the premises, who was at the premises to do business with a different entity.
The main issue arose when Sars began investigating the cars in the parking lot. It noticed that the vehicles contained several items and documents relating to the taxpayer. This proved to be a critical factor in the case.
Bechan’s car was among the cars in the parking lot, and, according to Sars, when asked to open his vehicle, he stated he did not have the keys. Sars sought assistance from the SAPS and the Hawks, as well as the services of a locksmith to open the vehicle in question. Once opened, Sars took possession of several items belonging to Bechan.
According to Bechan’s version, he handed the keys over to Sars and denied being present when Sars took possession of the items in question.
Issues considered
The critical issue in this matter was the institution of a mandament van spolie application by Bechan, who sought an order for Sars to return certain items in its possession. For this application to succeed, two legal questions had to be answered:
- Was there a disturbed dispossession of the applicant’s property?
- Was the search and seizure of the applicant’s vehicle by Sars, which fell outside of the scope of the granted warrant, unlawful?
In dealing with this issue, the court relied on the principles in Anale Ngqukumba v The Minister of Safety and Security, in which the Constitutional Court held that the “essence of the mandament van spolie is the restoration before all else of unlawfully deprived possession of the possessor. It finds expression in the maxim spoliatus ante omnia restituendus est (the despoiled person must be restored to possession before or else)”.
Essentially, the spoliation order is meant to prevent taking possession unless it is in accordance with the law.
Court finding
On the first issue, it was undisputed that Sars had taken possession of the applicant’s property. However, the two different versions between the parties ought to have two different outcomes for the second issue. The court found, on balance, the probability that the applicant did not relinquish possession voluntarily; therefore, there was a disturbed dispossession.
Searching property not identified in a warrant is lawful
Section 62 of the TAA empowers a Sars official to enter and search premises not identified in a warrant, subject to the following requirements:
- The property included in a warrant is at premises not identified in the warrant and may be removed or destroyed;
- The warrant cannot be obtained in time to prevent the removal or destruction of the relevant material; and
- The delay in obtaining a warrant would defeat the object of the search and seizure.
The court found that Sars was entitled, in the execution of the warrant, to ascertain whether Bechan had in his possession or under his control any of the taxpayer’s materials specified in the warrant. This view by the court was most likely motivated by the fact that Sars had earlier observed materials being carried to motor vehicles in the parking lot of the premises.
With respect to Bechan’s argument that the warrant had to be confined to the actual premises of the taxpayer, which excluded the parking lot, the court dismissed this view by stating that the warrant referred to the address of the taxpayer’s premises, which would also include the parking, and the interpretation argued by the taxpayer would undermine the warrant’s efficacy.
The court dismissed the application and ordered Bechan to pay the costs jointly and severally.
Comments
The importance of this finding is entrenched in the fact that, although a warrantless search may be executed by Sars, this search is subject to much more stringent requirements, even though the rights to privacy might be infringed at times. Such rights are subject to limitations, and, in the court’s view, section 62 of the TAA would be sufficient to meet the scrutiny of the limitation clause in section 36 of the Constitution.
Further, there are unanswered questions with respect to the true scope of the ability of Sars to investigate and seize, particularly without a warrant, and if such collected evidence could extend beyond the objects and purpose of the original warrant.
However, it is important for taxpayers to note that it is not always the case that Sars officials would need to furnish them with a warrant to search and seize their property, and, as the court highlighted, the circumstances in which these powers may be exercised by Sars depend on the facts.
This article was written by Francis Mayebe, a candidate attorney in Baker McKenzie’s tax practice in Johannesburg, and overseen by Virusha Subban, the head of tax.
Disclaimer: The information in this article does not constitute legal or financial advice.
