Sars hits a dead-end in Lesotho number plate case

The Supreme Court of Appeal (SCA) has dismissed with costs a South African Revenue Service (Sars) request to review a decision in favour of Ficksburg resident Joaquim Alves, whose Nissan Serena station wagon was impounded by customs officials in 2019 on the grounds that it was being driven in SA with a Lesotho number plate and without the necessary import permit.

Alves’s vehicle was being driven by a friend in the border town of Ficksburg when customs officials stopped the driver and asked to see the import permit.

Alves raced to the scene and argued with the customs officials that the vehicle was legally registered in Lesotho, and hence no import permit was required. The customs officials impounded the vehicle. Believing the law was on his side, Alves went to the municipal compound and retrieved the vehicle.

The next thing he knew, SA Police Service officers arrived at his door and arrested him. He ended up in hospital that weekend due to a pre-existing heart condition, and on the following Monday appeared in the Ficksburg Magistrates Court.

The magistrate ordered the release of the vehicle, though Sars failed to comply with this order.

Sars out of options

Mkhosi Radebe of MC Radebe Attorneys in Pretoria and Bloemfontein, who is representing Alves in the case, says Sars has exhausted all legal options in this case, and has been ordered to pay costs and adhere to the previous order to return the vehicle.

The ruling has some interesting ramifications, says Radebe.

“Firstly, it means anyone driving a car registered in Lesotho, Botswana and eSwatini, all of which are part of the Southern African Customs Union [SACU], is free to drive their vehicle unhindered on South African roads. Secondly, it means Sars has been overstepping its powers for years and has never been held to account – until now.”

Radebe is planning a class action suit against Sars for unlawfully impounding vehicles registered in neighbouring countries.

Arguments

In the court action, Alves’s lawyers argued that the Customs and Excise Act and various other pieces of legislation relied upon by Sars were so poorly worded that the tax authority was able to repeatedly overstep its legal powers.

“Unfortunately, they ran into Mr Alves who was determined to bring this to a positive conclusion, which we have now done.”

Alves’s team also argued that the imported vehicle could only enter the SACU after paying the appropriate duties at Durban Port, and was thereafter free to drive on SA roads without hindrance.

The prohibition on importing used vehicles from Japan and elsewhere is intended to support the local car manufacturing industry. As Moneyweb previously reported, to import one of these second-hand vehicles you need to apply for a permit from the International Trade Administration Commission of South Africa, which is limited to returning residents and immigrants for the most part.

The same rules do not apply to neighbouring countries such as Lesotho, where second-hand imported vehicles are everywhere in sight, and which is why you see so many of them in border towns.

The International Vehicle Identification Desk Southern Africa has reckoned a loss to the fiscus of billions of rands due to illegal imports of vehicles bleeding across the border from neighbouring countries.

Pillar to post

Moneyweb approached The Department of Trade, Industry and Competition for comment, and was referred to Sars.

Sars provided the following statement: “In terms of legislation, Sars is prohibited from commenting on confidential tax affairs, including whether or not companies and or their directors are under investigation or the subject of any tax administrative action or any such planned action.”

As to the likely impact of this ruling on the retail car market in SA, the National Automobile Dealers’ Association (NADA) says it “is not in a position to comment on the case without the benefit of being privy to all official documentation and facts on this matter.”

Radebe tells Moneyweb there has been a noticeable change in behaviour of customs officials, who are less enthusiastic about detailing vehicles with foreign number plates.

“We now have to get accountability from these officials, and that is what the class action suit will accomplish.”