The South Gauteng High Court has ruled that the South African Revenue Service (SARS) can search a property and seize items without a warrant.
The judgement related to the case of Bechan vs SARS Customs Investigations Unit, where Bechan’s said his vehicle was searched and property confiscated without a warrant.
Virusha Subban – a partner and tax specialist at Baker Mckenzie – says that Section 62 of the Tax Administration Act 28 of 2011 (TAA) permits the search of premises not identified in a warrant.
This power granted to SARS has been under scrutiny for many years, as it collides with the taxpayer’s Constitutional rights to privacy in section 14 of the Bill of Rights, contained in chapter two of the Constitution.
While a question remains whether such an infringement on one’s constitutional rights may be justifiable, the court’s ruling highlighted that the circumstances in which SARS may exercise these powers are highly fact-dependent.
Facts of the case
In the Buchan case, SARS was issued with a warrant, which authorized them to seize information and documentation concerning the matter at the premises of a particular company.
After SARS was granted access to the premises, besides finding the directors of the targeted company, they encountered Bechan, who was at the premises to do business with a different entity.
The main issue began when SARS started investigating the cars in the parking lot when executing its warrant.
SARS claimed that before entering the premises, officials noticed people carrying items from the taxpayer’s office and placing them in the vehicles around the parking lot.
Buchan’s car was among the vehicles in the parking lot, and according to SARS, when asked to open his car, he stated he did not have the key.
SARS considered this resistance and got the SAPS, Hawks, and a locksmith, to assist in opening the vehicle. Once opened, SARS took possession of several items belonging to Bechan.
According to Bechan, he handed his keys to SARS but was not present when officials opened the car and took possession of his items.
The issues brought forward to the High Court against SARS
Bechan argued that the warrant had to be confined only to the actual premises of the taxpayer, which excluded the parking lot.
He brought forward an application of mandament van spolie – which provides relief to persons deprived of goods without due legal procedure.
If accepted by the court, this would order SARS to return Bechan’s items in its possession.
Subban said that, for this application to succeed, two legal questions have to be answered:
- Was there disturbed dispossession of Bechan’s property?
- Was the search and seizure of Bechan’s vehicle by SARS, which fell outside the scope of the granted warrant, unlawful?
The High Court’s Judgement
The South Gauteng High Court dealt with the application of mandament van spolie against SARS separately in relation to the abovementioned questions.
Disturbed dispossession of Bechan’s property
It was undisputed that SARS had taken possession of Bechan’s property.
However, the court found a high probability that Bechan did not relinquish possession voluntarily, and therefore, there was disturbed dispossession.
The search outside of the scope of the warrant was lawful
Subban noted that under Section 62 of the TAA, a SARS official is allowed 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 specified in the warrant and may be removed or destroyed.
- SARS cannot obtain the warrant in time to prevent the removal or destruction of the relevant material.
- The delay in obtaining a warrant would defeat the object of the search and seizure.
Although there was disturbed dispossession, the court found SARS was entitled to ascertain whether Bechan had in his possession any of the company’s materials specified in the warrant.
This view by the court was attributed to SARS claiming to have seen materials being carried to vehicles in the parking lot.
Bechan’s argument that the warrant had to be confined only to the actual premises of the taxpayer, which excluded the parking lot, was also dismissed.
The court stated that the warrant referred to the address of the taxpayer’s premises, which would also include the parking, and the interpretation argued by Bechan would undermine the warrant’s efficacy.
As a result, the court dismissed Bechan’s spoilation application and ordered him to pay SARS’s costs jointly and severally.
The precedent set by the ruling
Subban said that this ruling is important because, although SARS may execute a warrantless search, the search is subject to specific circumstances, even though the search might sometimes infringe upon privacy rights.
Taxpayers must be aware that SARS officials don’t always need to furnish them with a warrant to search and seize their property. But, as the court highlighted, the circumstances in which SARS may exercise these powers highly depend on the facts.