{"id":865760,"date":"2026-07-08T13:00:00","date_gmt":"2026-07-08T11:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=865760"},"modified":"2026-07-08T12:48:07","modified_gmt":"2026-07-08T10:48:07","slug":"sars-nailed-for-r35-million","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/government\/865760\/sars-nailed-for-r35-million\/","title":{"rendered":"SARS nailed for R35 million"},"content":{"rendered":"\n

The Supreme Court of Appeal (SCA) has imposed a R35 million fine on the South African Revenue Service (SARS).<\/p>\n\n\n\n

The ruling clarified that SARS cannot issue tax demands without thoroughly considering the evidence, providing proper explanations, and adhering to fair administrative procedures.<\/p>\n\n\n\n

This decision stemmed from a case involving SARS and a customs clearing agent, QI Logistics, which was heard in the Supreme Court of Appeal (SCA). <\/p>\n\n\n\n

The court ruled in favour of QI, overturning the SARS Commissioner’s decision that held QI liable for over R35 million related to fuel shipments transported from Mozambique to Zimbabwe and Botswana.<\/p>\n\n\n\n

The court found that SARS had failed to adequately consider the evidence presented by QI and did not offer sufficient reasons for its decisions, which rendered the process procedurally irrational.<\/p>\n\n\n\n

Partners Quintus van der Merwe and Taryn Hunkin from Shepstone & Wylie explained the reasons behind the Supreme Court of Appeal’s decision. <\/p>\n\n\n\n

QI operates as a licensed clearing agent under the Customs and Excise Act 91 of 1964 (the Act). <\/p>\n\n\n\n

In 2020, QI filed a review application after the South African Revenue Service (SARS) demanded payment of just over R35 million. <\/p>\n\n\n\n

The dispute arose from fuel consignments imported from Mozambique in 2018, which were then transported in transit to Zimbabwe and Botswana.<\/p>\n\n\n\n

As a clearing agent, QI was responsible only for facilitating the clearance of the goods for transit through South Africa and had no control over or interest in the goods themselves. <\/p>\n\n\n\n

The South African Revenue Service (SARS) alleged that QI had not provided sufficient proof that the fuel had been exported and sought to hold QI liable for duties, levies, VAT, and forfeiture amounts associated with the goods.<\/p>\n\n\n\n

QI had received what were termed “acquittal documents,” which it presented to SARS as proof of export. <\/p>\n\n\n\n

However, SARS later disputed the authenticity of those acquittals and claimed that the goods had been diverted.<\/p>\n\n\n\n

In August 2024, the Gauteng High Court dismissed QI’s application, ruling that under the relevant legislation, liability hinged on whether the clearing agent could meet the statutory requirements to prove that the goods were duly exported. <\/p>\n\n\n\n

The High Court determined that QI failed to demonstrate compliance with these requirements and upheld SARS’s demand for all taxes and the forfeiture of the goods.<\/p>\n\n\n\n

A deeper dive into SARS<\/h2>\n\n\n
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Shepstone and Wylie Attorneys and Taryn Hunkin (far right)<\/em><\/figcaption><\/figure><\/div>\n\n\n

Van der Merwe and Hunkin noted that a key element influencing the court’s decision was SARS’s failure to provide reasons as mandated by section 5 of the Promotion of Administrative Justice Act.<\/p>\n\n\n\n

QI sought clarification regarding the inadequacy of its export documents and the basis for the forfeiture-related demand imposed on it. <\/p>\n\n\n\n

However, SARS did not respond. According to van der Merwe and Hunkin, this lack of response constitutes prima facie procedural unfairness.<\/p>\n\n\n\n

The court stated that a failure to provide reasons cannot usually be corrected through ex post facto rationalisation in litigation.<\/p>\n\n\n\n

The SCA emphasised that the absence of justification further indicated that the Commissioner had not properly considered pertinent evidence or adequately exercised the discretion allowed under the Act. <\/p>\n\n\n\n

The court differentiated between the liability for customs duties and the separate decision to demand an amount for forfeiture under section 88(2) of the Act. <\/p>\n\n\n\n

While duty liability may arise automatically if statutory requirements are met, the forfeiture provision grants SARS discretionary power.<\/p>\n\n\n\n

The SCA found no evidence that SARS took relevant factors into account, sought representations from QI, or evaluated whether a forfeiture-related demand was warranted. <\/p>\n\n\n\n

Consequently, van der Merwe and Hunkin indicated that the forfeiture decision was deemed procedurally irrational and unlawful. <\/p>\n\n\n\n

\u201cThe judgment reinforces the principle that administrative decisions must be lawful, reasonable and procedurally fair,\u201d van der Merwe and Hunkin said.<\/p>\n\n\n\n

In light of these findings, the SCA overturned the demand upon review, ordered costs, and referred the case back to SARS.<\/p>\n\n\n\n

Hunkin and van der Merwe said that a decision-maker must allow a party adversely affected the opportunity to be properly heard, and must then consider the information before reaching a decision.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Supreme Court of Appeal (SCA) has imposed a R35 million fine on the South African Revenue Service (SARS).<\/p>\n","protected":false},"author":127,"featured_media":862885,"comment_status":"open","ping_status":"","sticky":true,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"posted","_sma_x_autopost_error":"","_sma_x_post_id":"2074810986570146292","_sma_x_attempts":1,"footnotes":""},"categories":[23],"tags":[3246,10680],"class_list":["post-865760","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-government","tag-sars","tag-supreme-court-of-appeal"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/865760","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/127"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=865760"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/865760\/revisions"}],"predecessor-version":[{"id":865784,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/865760\/revisions\/865784"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/862885"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=865760"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=865760"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=865760"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}