Section 59 of the Tax Administration Act (“TAA”) allows a South African Revenue Service (“SARS”) official to authorise an application for a warrant under which SARS may enter a premises where relevant material is kept, to search the premises and any person present on the premises and seize relevant material.
SARS can apply ex parte to a judge for a warrant. On 22 March 2022 SARS applied for such a warrant which was duly issued on the basis that it was believed that Bullion Star had committed various tax offences. The warrant authorised the SARS officials to search a premises in Johannesburg. Further, when carrying out the search they were authorised, to open or cause to be opened or remove and open, anything which the officials suspected to be relevant material of Bullion Star.
When SARS arrived at the premises, they were not granted access immediately. Whilst waiting at the gate they saw people removing items from the building and placing them in vehicles. Upon entering they premises the officials found a Fortuner vehicle belonging to Mr Bechan containing files, notebooks, and electronic equipment. When SARS asked Mr Bechan to open the vehicle so they could search it, he said he could not find his keys, prompting SARS to engage the services of a locksmith to open it. In the vehicle SARS found 10 laptops, 4 cellular phones and various financial documents belonging to Bullion Star.
Mr Bechan and Bechan Consulting (Pty) Ltd (“Bechan”) applied to the High Court by way of a spoliation remedy for the return of certain items contending that SARS had unlawfully seized them as the seized property was not found at the premises but in their Fortuner which was parked in ‘a general carpark’ outside the premises. It was however later conceded that the Fortuner was parked on the premises. Bechan further submitted that the warrant was limited to Bullion Star’s property and not his property.
In opposing the application SARS said it had acted in accordance with section 60 of the TAA and not unlawfully. The High Court held that the warrant authorised officials to search anywhere on the premises, which included vehicles parked on the premises.
Bechan appealed the decision to the Supreme Court of Appeal (“SCA”), which handed down judgment in the matter of Bechan and Another v SARS Customs Investigations Unit and Others on 5 March 2024. The SCA held that whether a warrant may be executed against third parties (i.e., Bechan) depends on the interpretation of the warrant read together with the search and seizure provisions in the TAA. Upon reading the warrant, it was location specific and not taxpayer specific, and it could therefore be executed against third parties on the premises. Section 59 allows SARS to search “any person present on the premises”. Furthermore, section 60(1)(b) allows a judge to issue a warrant for “relevant material likely to be found on the premises specified in the application.” The SCA went on to state that “it is immaterial that the seized items are not in the possession of the taxpayer when seized. If they constitute relevant material as defined, they may be seized from a third party who is on the premises”.
The SCA pointed out that section 61(3) of the TAA does not limit the execution of a warrant to the business of the taxpayer. This provision contemplates that SARS may search anything on the premises identified in the warrant, if they suspect that it contains relevant material. This is broad enough to include vehicles parked on the premises. If search warrants did not include third parties, they could be rendered ineffectual.
SARS is not however given carte blanche in searching the property of third parties on the premises, they can only do so if they suspect that the property of the third party contains material relevant to the taxpayer.
SARS officials had reasonable cause to suspect the Fortuner contained material belonging to Bullion Star as they saw items being removed from the building and placed in vehicles. SARS were therefore entitled to search and seize material from the Fortuner and Bechan’s appeal was therefore dismissed.
Telephone: +27 31 570 5496, Email: graeme.palmer@gb.co.za.
