Sars gets blown in Lesotho number plate case, class action to follow

Joaquim Alves was arrested and locked up for a weekend in May 2019 when his Lesotho-registered vehicle, which was being driven by a friend, was seized by SA customs officials in the eastern Free State town of Ficksburg.

Alves has businesses on both sides of the Lesotho border, and the vehicle was used to travel to and fro across the border several times a week.

He argued in vain with South African Revenue Service (Sars) customs officials that they had misread the law in seizing his vehicle. He then “unlawfully” retrieved his vehicle from the Ficksburg municipal compound. Shortly thereafter, the police came and arrested him on charges of theft. Alves, who has high blood pressure, ended up in hospital.

The following Monday the local magistrate ordered that Alves be released and the matter was postponed to a later date. The charges of theft were then dropped and the magistrate ordered that the vehicle be returned to Alves’s possession. However, this did not happen. When Sars refused to return the vehicle, Alves took it and the SA Police Service to the high court in Bloemfontein and won his case. Sars hung on to the vehicle while appealing the case.

Moneyweb first reported on the story in March.

Last week Sars’s appeal was blown out of court and it was ordered to pay the legal costs.

Sars has yet to indicate whether it plans to lodge an appeal with the higher court, but Alves says he will be ready for it if and when it does.

The court ruling means Alves’s vehicle must be returned to his possession.

He has also lodged charges of fraud and contempt of court against the officials involved (for not releasing the vehicle when ordered to do so by the magistrate).

“What this means is that anyone with a vehicle registered in any Southern African Customs Union [Sacu] country is free to drive that vehicle in SA without hinderance,” says Mkhosi Radebe of MC Radebe Attorneys in Pretoria, which is representing Alves in this case. “My instructions are to take this, if necessary, to the Supreme Court of Appeal and the Constitutional Court to confirm what the Bloemfontein High Court has ruled.

“Sars is overstepping the law and has been doing this for decades.”

Up for the fight

The reason this is such a contentious issue is that South Africans need special permits to purchase cheap imported vehicles, mostly from Japan, yet the same rules do not apply to residents of other Sacu countries. This is why so many Lesotho and Botswana-registered vehicles are visible on SA roads. Yet owners of these vehicles have complained for years of seemingly arbitrary seizure of their vehicles by SA police and customs officials while driving in SA. Those days appear to be coming to an end.

When it happened to Joaquim Alves, they clearly picked on the wrong guy.

“Most people just meekly pay the penalties to get their impounded cars back again. In my case, I decided to take Sars and the police on in court to prove a point. And I am prepared to take it to the top court in the land,” says Alves.

This is a matter begging for a constitutional hearing, and it’s perhaps surprising that it hasn’t happened yet.

Section 88 of the Customs and Excise Act allows any officer, magistrate or member of the police to “detain any ship, vehicle, plant, material or goods at any place for the purpose of establishing whether that ship, vehicle, plant, material or goods are liable to forfeiture under this act”.

Radebe says this clause is so badly worded and open-ended that any South African driving their locally-purchased vehicle could be subject to the same treatment as Alves. “Any customs or police official has the right to seize your vehicle to see if it violates the Customs and Excise Act. This in our opinion violates the constitutional protections against arbitrary deprivation of property. This must be challenged.”

Fringe benefits

Tens of thousands of vehicles registered in Lesotho and Botswana are believed to have been impounded by Sars over the years and then released on payment of “penalties”. The court case Alves brought before the Bloemfontein High Court provides a possible explanation as to the enthusiasm for seizing vehicles. Radebe says Section 92 of the same act allows for the seizing officer to receive up to one third from the proceeds of any penalties or asset sales.

“Customs and police officers are making a fortune in personal commissions out of seized vehicles. That, too, must be challenged.”

Alves and Radebe have been gathering evidence from scores of other people in similar circumstances in preparation for a potential class action suit against Sars, likely run to a claim of several billion rands.

One case shown to Moneyweb details the case of a Lesotho-registered vehicle valued at R45 000 that was impounded by Sars and released on payment of penalties of R23 000 – nearly half the value of the car.

Roughly a third of that, nearly R8 000, would have gone to the officers who impounded the vehicle.

In another case, a South African-registered vehicle was impounded and released on the payment of penalties.

“These Sars and police officials are making a business out of seizing vehicles,” says Alves.

In Alves’s case, Sars argued that the seized vehicle was “imported” and could not be driven in SA without an import permit. If so, thousands of cheap imported vehicles driving around SA sporting number plates from Lesotho, Botswana, Namibia and eSwatini – all Sacu member nations – are prone to seizure in the same way.

Radebe says to classify these foreign-registered vehicles from Sacu countries as “imports” when driven on SA roads makes a mockery of the Sacu agreement.

“We have a common customs union and once goods are cleared through Durban and any excise paid, they can no longer be deemed ‘imports’. These goods can move freely through the entire customs union area.”

Another issue highlighted by the case is whether vehicle registration papers constitute proof of ownership.

In 2002 Alves purchased the vehicle in question, a second-hand Nissan Serena station wagon, but did not officially change ownership of the vehicle, a point raised by Sars in challenging his right to bring a case before court. His lawyers argued the fact that transfer of the vehicle to Alves’s name does not affect his title or ownership of the property.