Judgment summary
Afrinergy Holdings (Pty) Ltd brought a review application under PAJA (Act 3 of 2000), alternatively on the basis of unlawfulness, seeking to set aside the First Respondent's decision to seize a Mercedes Benz truck, a trailer and 39 892 litres of diesel fuel that had been detained at the Oshoek Border Post on 11 July 2019 [1, 2, 15].
The court was required to determine five issues: whether the answering affidavit constituted hearsay evidence; whether the applicant had complied with section 89 of the Customs and Excise Act 91 of 1964 ("the Act"); whether the applicant had complied with section 96 of the Act; whether condonation could be granted; and whether the applicant had satisfied the requirements for the review [5].
The court upheld SARS's point in limine, finding that the applicant had not complied with sections 89 and 96 of the Act, and dismissed the application with costs, including the costs of two counsel in accordance with Scale C of Rule 67A (as amended) of the Uniform Rules of Court [58, 78].
Background
On 10 July 2019 a consignment of fuel purportedly passed through the Oshoek Border Post (OBP) [11]. SARS's Focused Investigations: Tactical Intervention Unit (TIU) investigated the incident to determine whether due entry had been made and whether the Act had been complied with [11, 12].
TIU officials found a Mercedes Benz truck and a trailer, used to convey 39 892 litres of fuel, abandoned at the OBP. The driver had absconded [13]. Inside the truck, officials found an invoice indicating the fuel was being imported into South Africa, as well as Eswatini declaration documents [14].
The truck and fuel were detained on 11 July 2019 under section 88(1)(a) of the Act [15]. A detention notice was issued to Afrinergy, advising that the vehicles and fuel would be removed to a state warehouse and setting out conditions for release, including submission of customs declaration forms and payment of the fuel levy and possible penalties [16].
In August 2019 SARS requested further information from the applicant, including proof of vehicle ownership and movement tracking records [17]. On 15 August 2019 Afrinergy submitted only some of the requested information [17]. On 5 September 2019 SARS requested additional information, including proof of fuel purchases from Mozambique and all import and export entries between Mozambique, South Africa and Eswatini [18]. On 29 September 2019 the applicant submitted an invoice for the detained diesel fuel [18].
On 14 May 2020 Afrinergy submitted a notice of intention to institute legal proceedings against SARS, stating its cause of action as the release of the truck, trailer and fuel [19]. On 8 July 2020 SARS issued a notice of intent to seize, setting out its preliminary findings: that the fuel had been brought into the country without payment of duties and without an import declaration; that tracker records showed truck movements between South Africa, Mozambique and Eswatini between 28 June 2019 and 10 July 2019; and that invoices submitted on 29 September 2019 reflected a different amount and value from the invoice used to declare the consignment in Eswatini [20].
Afrinergy responded on 16 July 2020, denying any breach [21]. SARS responded on 13 August 2020, maintaining its position and pointing to discrepancies in the tracker report and invoices [22]. SARS thereafter issued the seizure notice under section 88(1)(c) of the Act [23].
The applicant filed an Internal Administrative Appeal (IAA) on 19 November 2020, which the IAA Committee dismissed [24, 25]. On 12 March 2021 Afrinergy was given additional reasons for the refusal of the appeal [25]. The applicant also referred the matter to alternative dispute resolution (ADR) on 14 April 2020, and on 28 September 2021 SARS terminated the ADR proceedings, confirming that the seizure had been correctly decided [26].
Afrinergy served a second section 96 notice on 25 February 2022 and issued the review application on 28 March 2022 [38]. At the hearing the applicant applied, without opposition, to amend the notice of motion to seek review and setting aside of the seizure decision dated 13 August 2020, condonation of any non-compliance with section 89 of the Act, and a costs order [27, 28, 29].
Core dispute
The central dispute was whether SARS's decision to seize the truck, trailer and 39 892 litres of diesel fuel was unlawful and liable to be set aside on review [1, 4].
A preliminary dispute arose as to whether the applicant had complied with the notice and time-limit requirements of sections 89 and 96 of the Customs and Excise Act 91 of 1964. SARS contended that the section 96 notice should have been served no later than 12 June 2021 (within 90 days of the IAA outcome communicated on 12 March 2021) and that review proceedings should have been instituted no later than 12 September 2021 [35]. SARS further argued that neither notice nor proceedings were instituted timeously, and that no condonation had been sought from the Commissioner [38, 40].
The applicant argued that section 89 did not apply because it was seeking a PAJA review rather than a claim for seized goods under section 89, that the ADR process suspended the running of time, and that it had provided sufficient notice and acted within PAJA's 180-day period [41, 42, 43, 47, 48].
On the merits, the dispute turned on whether Afrinergy had contravened the Act by bringing fuel into South Africa without making due entry, and whether the Commissioner's decision to seize was lawful [4, 62].
Court findings
On the hearsay point, the court found that the circumstances of the detention were common cause between the parties and that the applicant's own case was based on the same facts. The court therefore declined to find that the answering affidavit constituted hearsay evidence as defined in section 3(4) of the Law of Evidence Amendment Act 45 of 1988 [10].
On section 89 and section 96 compliance, the court found that the first section 96 notice, dated 14 May 2020, had been served before any seizure had taken place, and therefore before any cause of action had arisen. That notice was premature and at best a nullity [51]. The court relied on The Commissioner for the South African Revenue Service and Others v Dragon Freight (Pty) Ltd and Others [2022] 3 All SA 311 (SCA) in support of this reasoning [52].
The second section 96 notice was served on 25 February 2022, some eleven months after the applicant was informed on 12 March 2021 that its IAA had been unsuccessful. That notice was served outside the 90-day period prescribed by the Act [53, 54]. Neither notice had sought condonation from the Commissioner for late service, nor had an extension of the prescribed period been requested [55].
The court held that, absent a prior request for condonation to the Commissioner, the court lacked the power to condone the failure to have acted within the prescribed period. Accordingly, the proceedings had been instituted prematurely and in the absence of the required condonation process. The court found non-compliance with section 96 of the Act [56]. The court also relied on The Commissioner for the South African Revenue Service v Prudence Forwarding (Pty) Ltd 2015 JDR 2545 (GP), which held that the jurisdictional conditions precedent had not been fulfilled and that the court therefore lacked jurisdiction to grant the relief sought [57].
On section 93, the court noted that the applicant had not provided proof of ownership of the seized goods, resulting in further non-compliance [60, 61].
On the merits of the review, the court found that the applicant had not placed evidence before it, including any affidavit from the truck driver, to support the contention that the OBP was unmanned [68, 70]. The court found it could not conclude that the OBP was not adequately manned on the day of the incident [70]. The court held that it was always the applicant's obligation to declare the goods at the border post or within seven days under section 38 of the Act [69].
The court further held that the decision taken by the Commissioner was lawful. The Commissioner had engaged with the applicant, assessed the explanations provided and considered the invoices and tracker records before deciding to seize [76]. Relying on Liberty Life Association of Africa v Kachelhoffer 2001 (3) SA 1094 (C), the court confirmed that a review is concerned with the process and legality of the decision, not its correctness on the merits [77].
Outcome
The respondent's point in limine was upheld with costs [78.1]. The application was dismissed with costs, including the costs of two counsel, in accordance with Scale C of Rule 67A (as amended) of the Uniform Rules of Court [78.2].
Major issues / areas of contention
- Whether the answering affidavit deposed to by a SARS Operations Manager who was not present at the border constituted hearsay evidence under section 3(4) of the Law of Evidence Amendment Act 45 of 1988.
- Whether the applicant complied with the 90-day notice requirement in section 89(2) of the Customs and Excise Act 91 of 1964 by serving a timeous section 96 notice on the Commissioner.
- Whether the first section 96 notice, served on 14 May 2020 before the seizure had taken place, was valid or a nullity for want of a cause of action.
- Whether the second section 96 notice, served on 25 February 2022 approximately eleven months after the unsuccessful IAA outcome of 12 March 2021, was served within the prescribed 90-day period.
- Whether the court could grant condonation for late service of the section 96 notice in circumstances where no prior request for condonation had been made to the Commissioner.
- Whether the ADR process, terminated by SARS on 28 September 2021, extended or suspended the running of the 90-day period under section 89 of the Act.
- Whether the applicant had locus standi under section 93 of the Act in the absence of proof of ownership of the seized truck and fuel.
- Whether the applicant's truck passed through the Oshoek Border Post without making due entry of 39 892 litres of diesel fuel in contravention of the Act.
- Whether the Commissioner's decision to seize the truck, trailer and fuel under section 88(1)(c) of the Act was lawful and susceptible to review under PAJA.