The Supreme Court puts SARS in its place

The Supreme Court of Appeal has ruled that SARS cannot rely on overbroad search-and-seizure warrants, warning that its tax enforcement powers remain subject to strict legal limits.

The South African Revenue Service (SARS) may have extensive statutory powers, but they are not without limits, said Tax Consulting SA’s Team Lead of Tax Controversy & International Tax, Richan Schwellnus.

This fact emerged in a recent Supreme Court of Appeal (SCA) ruling, which delivered an important reminder that SARS must still adhere to the principles of legality, judicial oversight, and constitutional safeguards.

In the 2026 case of CSARS v Bullion Star, the SCA dismissed SARS’ appeal against a prior High Court order setting aside a search and seizure warrant issued under section 60 of the Tax Administration Act (TAA).

The warrant had been obtained by SARS on an ex parte basis and executed against Bullion Star, a licensed gold refinery, as well as at the residences of its director and an employee.

SARS investigated Bullion Star in relation to its Value-Added Tax (VAT) affairs for the period of November 2020 to February 2022.

SARS believed that Bullion Star was dealing in Krugerrand gold coins, rather than second-hand gold, which had VAT consequences.

SARS’ concern was that Bullion Star may have incorrectly claimed input VAT of approximately R13.9 million, Schwellnus explained.

To advance its investigation, Schwellnus said SARS obtained a search-and-seizure warrant under section 60 of the TAA. The purpose stated in SARS’ own founding affidavit was narrow.

SARS sought access to the original raw data relating to photographs, WhatsApp messages, emails, and other electronic communications to verify certain information. However, the warrant granted went far wider than this stated purpose.

Section 60(1) of the TAA permits a judge or magistrate to issue a warrant only if satisfied that there are reasonable grounds to believe that:

a person failed to comply with an obligation under a tax Act, or committed a tax offence; and
relevant material likely to be found on the premises may provide evidence of that non-compliance or offence.

The SCA confirmed that issuing such a warrant involves judicial discretion. The court is required to consider SARS’ investigative interests.

But, because search and seizure powers are invasive, Schwellnus added that the court must also consider the taxpayer’s constitutional right to privacy under section 14 of the Constitution.

The taxman’s overboard warrant

Schwellnus explained that the revenue service ultimately conceded that the warrant was overbroad, which the SCA accepted.

The court explained that a warrant is overbroad in cases where it authorises acts beyond what the statute permits, or where it fails to define the scope of the search with sufficient particularity.

Importantly, the court confirmed that an overbroad warrant is unlawful. “This clarification was fatal for SARS,” Schwellnus said.

The warrant did not align with the limited purpose SARS had advanced in its own application, as it had asked for a warrant to verify specific raw electronic data, Schwellnus pointed out.

Instead, the warrant authorised a broader search-and-seizure operation. SARS argued that the High Court should not have set the warrant aside entirely, but should instead have narrowed or severed the overbroad portions.

The SCA rejected this, as SARS had initially defended the warrant in its entirety and only sought a limited variation after Bullion Star had already argued its case in the reconsideration application.

The Court found that SARS had not made out a proper case for amending the warrant after execution. The SCA further held that SARS’ reliance on section 66(4) of the TAA was misplaced.

Although that section allows a court, in appropriate circumstances, to allow SARS to retain original or copied relevant material in the interests of justice, Schwellnus said SARS had not properly laid the foundation for such relief.

Not even SARS is above the law

A key issue was whether SARS could still use the seized material because of an earlier consent order between the parties, Schwellnus said.

The SCA held that SARS relied too heavily on that order and found that the consent order was interim and linked to the pending reconsideration application.

Once the warrant was found unlawful, Schwellnus noted, the seized material could not be used by the taxman.

“The court was clear – the fact that SARS had already seen or possessed the documents did not assist it. SARS would not be permitted to use the documents obtained under the unlawful warrant.”

He explained that this judgment is significant for taxpayers and SARS alike. “For taxpayers, it confirms that SARS’ powers of search and seizure are not unlimited.”

A taxpayer faced with an ex parte warrant is not without remedy, as under Rule 6(12)(c) of the Uniform Rules of Court, the taxpayer may seek reconsideration of an order granted in its absence.

“For SARS, the judgment is a warning that warrants must be carefully drafted, factually justified, and proportionate,” he said.

“SARS must stand or fall by the case it makes in its founding papers, and a warrant cannot be broader than the purpose relied upon to obtain it.”

The revenue service has powerful tools under the TAA, including audit, information-gathering, and search-and-seizure powers.

However, the SCA’s message is simple – tax enforcement must remain lawful. SARS may only use the tools at its disposal in a manner that complies strictly with statutory provisions and the Constitution.

According to Schwellnus, an overbroad warrant is not a technical defect, but strikes at the legality of the search itself.

“For taxpayers, the judgment reinforces the importance of obtaining specialist tax legal advice immediately where SARS executes a search and seizure warrant.”

“Timing is critical, and the correct procedural response can determine whether unlawfully obtained material may be challenged, sealed, returned, or excluded from use.”