Judgment summary
Mr Kapeel Bechan and his company, Bechan Consulting (Pty) Ltd, applied for the return of items seized from Mr Bechan's motor vehicle, a Toyota Fortuner, during the execution of a search and seizure warrant issued under section 60 of the Tax Administration Act 28 of 2011 in respect of Bullion Star (Pty) Ltd. The vehicle was parked on premises specified in the warrant, and SARS officials seized laptops, cellular phones and financial documents from it (paras 4 to 6).
The appellants sought the return of two laptop computers and two cellular phones by way of the mandament van spolie, arguing that the warrant applied only to Bullion Star and not to third parties such as themselves. The High Court dismissed the application, holding that SARS was entitled to search anywhere on the premises, including vehicles parked there, and that limiting the warrant to Bullion Star would undermine its efficacy (para 9).
The Supreme Court of Appeal dismissed the appeal, holding that sections 59(1) and 60(1) of the TAA are location specific rather than taxpayer specific, and that section 61(3)(a) permits SARS officials to search anything on the premises, including a third party's vehicle, if they suspect it contains material relevant to the taxpayer (paras 12 to 19).
Background
SARS applied without notice to the High Court on 28 March 2022 for a warrant under section 59 of the TAA in respect of Bullion Star (Pty) Ltd, on the basis that there was reason to believe Bullion Star had committed various tax offences. The High Court issued the warrant under section 60 of the TAA, authorising SARS officials to search premises at 62 Wessels Road, Rivonia, Johannesburg, and to open or remove anything suspected to contain relevant material of Bullion Star (para 2).
On 29 March 2022, SARS officials arrived at the premises and were granted access after a delay, during which they observed people removing items from the building and placing them in vehicles. Upon entry, they found a Toyota Fortuner, registration HV07BBGP, parked on the premises, containing files, notebooks and electronic equipment. On being told Mr Bechan owned the vehicle, officials had it unlocked by a locksmith after Mr Bechan said he could not find the keys, and invited him to be present during the search (paras 4 to 5).
SARS compiled inventories of items found in the Fortuner, including 10 laptop computers, four cellular phones and financial documents pertaining to Bullion Star. The appellants' notice of motion sought the return of only two laptop computers and two cellular phones (para 6).
Core dispute
The dispute concerned whether SARS lawfully seized the appellants' property from the Fortuner, and whether a warrant issued under section 60 of the TAA in respect of a named taxpayer, Bullion Star, could be executed against third parties, such as Mr Bechan and his company, who happened to be on the premises identified in the warrant (paras 7, 10 to 11).
The appellants argued that SARS had unlawfully deprived them of property that was not found on the premises but in a general carpark outside it, and that the scope of the warrant was limited to Bullion Star's property and did not extend to third parties' property (para 7). SARS contended that on a proper reading of sections 59(1) and 60(1) of the TAA, the warrant was location specific and not taxpayer specific, and could therefore be executed against third parties on the premises (para 12).
Court findings
The court applied the Plascon-Evans rule, as confirmed in Thint (Pty) Ltd v National Director of Public Prosecutions, meaning factual disputes concerning execution of the warrant were resolved in favour of SARS' version (para 3). The appellants conceded during argument that the Fortuner was parked on the premises (para 10).
The court held that sections 59(1) and 60(1) of the TAA are location specific and not taxpayer specific, and contemplate that persons other than the taxpayer may be present on the premises and in possession of material relevant to the taxpayer (paras 12 to 13). The phrase in section 59(1) permitting a search of 'the premises and any persons present on the premises' indicated that SARS officials may search third parties on the premises and seize relevant material even if it is not in the taxpayer's possession (para 14).
Section 61(3)(a) was found to permit SARS officials to open, remove or search anything on the premises identified in the warrant, including vehicles, if the officials suspect it contains relevant material, though this power is not carte blanche and requires suspicion that the third party's property contains material relevant to the taxpayer (paras 15 to 17). On the facts, SARS officials had reasonable cause to suspect the Fortuner contained material relevant to Bullion Star, having seen files, notebooks and electronic equipment inside it and having observed items being moved from the building into vehicles on the premises (paras 18 to 19).
The court rejected the appellants' submission that officials had to know with certainty that the vehicle contained relevant material, holding that section 61(3)(a) requires only suspicion (para 19). The court noted, for completeness, that the High Court had subsequently set aside the search and seizure warrant on 2 February 2024 in separate proceedings instituted by Bullion Star, but held this was irrelevant to the appeal, as the correctness of a judgment is assessed on the facts existing when it was given (para 22).
Outcome
The appeal was dismissed with costs, including the costs of two counsel (para 23).
Major issues / areas of contention
- Whether a warrant issued under section 60 of the Tax Administration Act 28 of 2011 could be executed against third parties present on the premises identified in the warrant, rather than only against the named taxpayer.
- Whether sections 59(1) and 60(1) of the TAA are location specific or taxpayer specific.
- Whether section 61(3)(a) of the TAA permitted SARS officials to search a motor vehicle belonging to a third party parked on the premises identified in the warrant.
- Whether SARS officials required certainty, or merely suspicion, that the vehicle contained material relevant to the taxpayer before searching it.
- Whether the appellants were entitled to the return of seized items by way of the mandament van spolie.
- Whether a subsequent order setting aside the warrant in separate proceedings was relevant to the appeal.