About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2007
>>
[2007] ZASCA 59
|
|
Commissioner for the South African Revenue Service v Trend Finance (Pty) Ltd (162/06) [2007] ZASCA 59; 2007 (6) SA 117 (SCA); 69 SATC 120 (23 May 2007)
Links to summary
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Case number : 162/06
Reportable
In the matter between :
THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE
............................... APPELLANT
and
TREND FINANCE (PTY) LIMITED
............................... FIRST RESPONDENT
TREND GEAR ENTERPRISES (PTY) LIMITED
............................... SECOND RESPONDENT
CORAM : HOWIE P, CLOETE, HEHER, VAN HEERDEN
et
COMBRINCK JJA
HEARD : 7 MAY 2007
DELIVERED : 23 MAY 2007
Summary:
Customs and
Excise Act
91 of 1964: the power
conferred on the Commissioner, SARS, to determine the value of
imported goods for duty purposes, must be exercised
within a
reasonable period of time; if it is not, the right to retain goods
seized or security given falls away.
Promotion of Administrative Justice Act
Act 3 of 2000: The Commissioner, SARS, has a right
but not a duty to determine the value of imported goods for duty
purposes. Therefore
if the Commissioner seizes imported goods pending
an investigation into whether the goods are liable for forfeiture, he
or she cannot
be compelled in terms of ss 6(3) and 8(2) of PAJA to
make such a determination.
Neutral citation: This judgment may be referred to as
Commissioner, SARS v Trend Finance
(Pty) Ltd
[2007] SCA 59 (RSA).
_________________________________________________________
JUDGMENT
CLOETE JA
/
CLOETE JA
[1] This appeal concerns three consignments of shoes
imported into South Africa from China. The first was destined for
sale in branches
of Pep Stores and the other two in branches of
Foschini, both well-known clothing retailers. The purchase,
importation and subsequent
delivery of the shoes to Pep and Foschini
were undertaken by Trend Finance (Pty) Limited and Trend Gear
Enterprises (Pty) Limited,
which are family enterprises run by Mr
Ismail Essop with the assistance of his daughters. I shall refer to
both companies simply
as ‘Trend’. The shoes were
manufactured in mainland China. The shipper in terms of the bills of
lading, under cover of
which each consignment of the shoes was
brought from Hong Kong to South Africa, was a Hong Kong trading
house, Kedah Company Limited,
controlled by a Mr Cheng.
[2] When the three consignments arrived in South Africa,
the Controller of Customs, Cape Town, acting on behalf of the
Commissioner
for the South African Revenue Service, refused to
release them. In each case the clearing agent retained by Trend made
payments under
cover of a completed DA70 form which is headed
‘Application to Make Provisional Payment’. The reason
given for the payment
of R100 000 on 12 March 1999 in the case
of the first consignment was ‘provisional payment lodged
pending outcome of investigations’
and in the case of each of
the second and third consignments, where amounts of R300 000 and
R600 000 were paid on 20 August
and 1 September 1999
respectively, the reason given was ‘provisional payment lodged
for possible underpayment in customs duty
and VAT’. After the
payments were made, the shoes were released ─ the first
consignment in March 1999 and the other two
in August and September
the same year.
[3] It would be convenient at this stage to summarise
those provisions of the Customs and Excise Act, 91 of 1964 which are
relevant
for present purposes. As appears from its long title, one of
the purposes of the Act is to ‘provide for the levying of
customs
and excise duties . . . and for matters incidental thereto’.
The Commissioner for the SA Revenue Service is, in terms of s
2(1),
charged with the administration of the Act subject to the control of
the Minister of Finance. The Controller is an officer
designated by
the Commissioner and includes an officer acting under the control of
the Controller.
[4] Chapter II of the Act prescribes the powers of
officers. An officer is authorised in terms of s 4(4)(a), without
notice, to enter
any premises and make such inquiry as he or she
deems necessary and require any person then and there to produce any
book, document
or thing which such officer has reasonable cause to
suspect relates to matters dealt with in the Act.
1
[5] Chapter V deals with clearance of goods and
liability for payment of duties. Every importer of goods is obliged
in terms of s
38(1) to make due entry of those goods in terms of s
39. That latter section requires the person entering any imported
goods for
any purpose to deliver a bill of entry to the Controller in
the prescribed form; to declare that the particulars contained in the
bill of entry are correct; and to pay all duties due on the goods.
Section 40(1) provides that no entry shall be valid unless the
true
value of the goods on which duty is leviable or which is required to
be declared under the provisions of the Act, has been declared;
a
correct invoice has been produced to the Controller in the case of
goods consigned to any person in the Republic; and the correct
duty
has been paid. Section 44(6)(c) provides that in all cases except
those specifically mentioned, the liability for duty on any
imported
goods is that of the importer or owner of such goods (or any person
who assumes such liability for any purpose under the
provisions of
the Act). Section 44(10) provides that any duty for which any person
is liable in terms of s 44 shall be payable upon
demand by the
Commissioner. Section 47 provides that duty shall be paid on all
imported goods in accordance with the provisions of
Schedule 1.
[6] Chapter IX deals with value. Section 65(1) provides
that the value for customs duty purposes of any imported goods shall,
at the
time of entry, be the transaction value thereof within the
meaning of s 66; and that section stipulates that the transaction
value
is the price actually paid or payable for the goods when sold
for export to the Republic (adjusted in terms of s 67). Section
65(4)(a)
provides that the Commissioner may in writing determine the
transaction value of any imported goods, which is required to be
ascertained
or may be determined as provided in s 66.
2
Section 65(6)(a) provides that an appeal against any
such determination shall lie to the division of the High Court of
South Africa
having jurisdiction to hear appeals in the area wherein
the determination was made, or the goods in question were entered for
home
consumption.
[7] The penal provisions of the Act are contained in
chapter XI. Section 78(1) is in extremely wide terms. It provides
that any person
who contravenes or fails to comply with any provision
of the Act shall be guilty of an offence. In addition s 83(a)
provides that
any person who deals with any goods contrary to the
provisions of the Act shall be guilty of an offence. Apart from those
(and other)
criminal provisions, s 87(1) provides that goods imported
contrary to the provisions of the Act are liable to forfeiture.
Section
88(1)(a) provides that any officer may detain any goods at
any place for the purpose of establishing whether the goods are
liable
to forfeiture. Section 88(2)(a) provides that if any goods
liable to forfeiture cannot readily be found, the Commissioner may
demand
from any person who imported such goods contrary to the
provisions of the Act, payment of an amount equal to the value for
duty purposes
of the goods plus any unpaid duty thereon. Section
93(1)(c) provides that the Commissioner may, on good cause shown by
the owner
thereof, direct that any goods detained or seized under the
Act be delivered to such owner, subject to such conditions as the
Commissioner
may determine including conditions providing for the
payment of an amount not exceeding the value for duty purposes of the
goods
plus any unpaid duty thereon.
[8] On 29 March 2001 the Controller wrote a letter to
Trend in regard to the first consignment. The essential part of the
letter read:
‘
Arising
from an inspection of books and documents, under payments in Customs
Duty and VAT amounting to R363 371.09 were found
as reflected on
the attached schedule. The schedule refers to various imports, which
were incorrectly invoiced and incorrectly entered
for customs duty
purposes.
In view of the circumstances
here prevailing, the goods were irregularly dealt with contrary to
the provisions
inter alia
section
38(1), read with sections 39(1), 40(1), 47(1), 47A(1), 65, 66 and 67
of the Customs and Excise Act no 91 of 1964 (the Act)
which
constitute offences in terms of sections 83 and 84 of the Act.
As the importer/owner of the goods
reflected on the attached schedule you are liable for the duty and
VAT due thereon in terms of
section 44(6)(c) and the duty due is
hereby demanded in terms of section 44(10) of the Act.
In view of the circumstances here
prevailing the goods were irregularly dealt with contrary to the
provisions of the Act. The goods
are therefore liable to forfeiture
and seizure in terms of section 87(1) and 88 of the Act. If goods
liable to forfeiture cannot
readily be found the Commissioner of
South African Revenue Service may demanded from the importer, payment
of an amount equal to
the value for duty purposes of such goods plus
any unpaid duty thereon. In the circumstances an amount of
R732 903.00 is demanded
in lieu of forfeiture.
The total sum to be remitted to this
office is as follows:
. . .
Underpayment of Customs Duty R219 780.90
Underpayment VAT R143 590.19
Total underpayment of duty R363 371.09
Forfeiture in terms of section 88(2)(a)
R732 903.00.’
The total sum claimed amounted to R1 096 274,09.
No similar letter was sent in respect of the second and third
consignments
and the amounts of R300 000 and R600 000
provisionally paid in respect of those consignments have not been
repaid by the
Commissioner.
[9] In terms of a notice of motion dated 9 October 2001
the Trend companies, as applicants, commenced motion proceedings in
the Cape
Town High Court against the Commissioner for the South
African Revenue Service as the first respondent and the Controller of
Customs,
Cape Town, as the second respondent. The main relief sought
by Trend was the following:
1. In terms of s 65(6) of the Act, an order setting
aside the determination contained in the Controller’s letter
dated 29 March
2001.
2. An order reviewing and setting aside the penalty of
R732 903 (which the Commissioner later reduced to R695 508)
imposed
in terms of s 88(2)(a) in lieu of forfeiture.
3. An order directing the Commissioner to repay to
Trend:
3.1 R100 000 (ie the provisional payment made in
respect of the first consignment) together with interest thereon at
the prescribed
rate from 12 March 1999 to date of payment;
3.2 R300 000 (ie the provisional payment made in
respect of the second consignment) together with interest thereon at
the prescribed
rate from 20 August 1999 to date of payment; and
3.3 R600 000 (ie the provisional payment made in
respect of the third consignment) together with interest thereon at
the prescribed
rate from 1 September 1999 to date of payment.
[10] In respect of the first consignment, therefore,
Trend sought to have the penalty of R695 508 set aside. It also
appealed
in terms of s 65(4)(a) read with s 65(6) of the Act against
the determination made by the Commissioner in respect of that
consignment.
The basis of the appeal was that the true transaction
values had been declared in the Bills of Entry, being the amounts
paid by Trend
to its supplier, Textrade (another Hong Kong trading
house who it alleged had obtained the shoes from Kedah), whereas the
Commissioner
had calculated the true transaction values on the basis
of higher prices contained in pro forma invoices which Kedah had sent
to
Pep. The court
a quo
(Van
Reenen J) referred to evidence two disputes, namely:
(1) from which entity Trend purchased the shoes
comprising the first consignment; and
(2) the transaction value of such shoes.
[11] The court
a quo
ultimately found in favour of the Commissioner on both
issues referred to evidence. It nevertheless set aside the penalty of
R695 508
imposed in lieu of forfeiture in terms of s 88(2)(a) of
the Act. (The reason it did so is not relevant as the Commissioner
has not
sought to appeal against that part of the order.) The relief
sought in para 1 of the notice of motion (the appeal against the
determination
by the Commissioner) was refused, as was para 3.1 in
terms of which repayment of the R100 000 provisionally paid a
security
in respect of the first consignment, was claimed. Trend
contended in this court that the court
a quo
should have determined the issues referred to evidence
in its favour, and it accordingly sought to set aside the whole of
the Commissioner’s
determination in the letter of 29 May 2001
relating to the first consignment. It also sought repayment of the
R100 000 provisionally
paid in respect of that consignment.
These contentions form the subject matter of Trend’s
cross-appeal.
[12] The court
a quo
granted the relief sought in paras 3.2 and 3.3 of the
notice of motion and ordered the Commissioner to repay the amounts of
R300 000
and R600 000 paid to the Commissioner as security
in respect of the second and third consignments together with
interest, but
subject to the Commissioner’s right of set-off.
The Commissioner appealed to this court against that order. Both the
appeal
and the cross-appeal are with the leave of the court
a
quo
.
[13] I shall deal first with Trend’s cross-appeal
which concerns the first consignment. It was correctly conceded on
behalf
of Trend that in terms of s 102(4) of the Act, it bore the
onus of proving that the proper duty had been paid. The relevant part
of the section reads:
‘
If
. . . in any dispute in which . . . the Commissioner is a party, the
question arises whether the proper duty has been paid . .
. it shall
be presumed that such duty has not been paid . . . unless the
contrary is proved.’
[14] At the hearing Essop testified that he had been
approached by Pep towards the end of 1998. Pep informed him that it
had sourced
shoes, manufactured in China, from Kedah in Hong Kong.
Pep wanted to bring consignments of those shoes into South Africa. It
was
unable to do so itself because the Department of Trade and
Industry regulated importation of shoes from China by permits and Pep
did not itself have enough permits. Trend however had access to a
number of small entities that did have such permits. Trend and
Pep
entered into an agreement in terms of which Trend would purchase the
shoes from Kedah, transport the shoes to South Africa, clear
them
through customs and deliver them to a Pep warehouse in the Cape. None
of this evidence is contentious. What was contentious
was the
evidence of Essop and his daughters that Trend had retained the
services of a Mr Wan of Textrade to negotiate with Kedah
for the
purchase of the shoes comprising the first consignment; and that
Trend had paid a third party, Assanmal (another Hong Kong
entity), as
directed by Textrade, US $3,20 per pair and US $2.95 per pair
respectively for the men’s and youths’ size
shoes. The
Essops had no personal knowledge of what had transpired between Wan,
Assanmal and Kedah. Trend delivered no affidavit
by Wan and he was
not called to give evidence.
[15] The Commissioner’s case was that the alleged
transaction with Wan/Textrade was fictitious and that the documents
produced
in support of it were false. The Commissioner pointed to pro
forma invoices sent by Kedah to Pep dated 16 and 17 December 1998
which
reflected that Kedah would supply men’s shoes at US $5
and youths’ shoes at US $4.45 per pair. The prices referred to
in those pro forma invoices were proved in evidence by Mr Atkins, who
was employed at the time by Pep as the senior buyer for male
footwear
and who in that capacity personally negotiated the prices with Cheng
of Kedah towards the end of 1998 in Hong Kong. As I
have said, the
learned judge in the court below found in favour of the Commissioner
on both points referred to evidence ie he found
that Trend had
purchased the shoes from Kedah (and not Wan of Textrade) and that the
transaction value of the shoes was US $5 and
4.45, not US $3.20 and
2.95.
[16] In coming to this conclusion, the learned judge had
regard to an affidavit obtained by officials of SARS from Cheng in
Hong Kong,
and documents annexed thereto, which he admitted in
evidence (despite opposition from Trend) in terms of the provisions
of s 34 of
the Civil Proceedings Evidence Act, 25 of 1965. In the
affidavit Cheng averred that Trend had, through letters of credit
arranged
by its own agent, Assanmal, paid Kedah the amount per pair
of shoes agreed upon with Atkins of Pep; that he had negotiated
directly
with Essop; and that he had never had any communication with
Wan or anyone else from Textrade. On appeal, counsel representing
Trend
submitted that Cheng’s affidavit had been wrongly
admitted and that the learned judge
a quo
had in addition misdirected himself on the facts. It
seems to me, however, that the conclusion reached by the court
a
quo
is amply justified even if the affidavit
by Cheng is left out of account.
[17] Kedah (represented by Cheng) and Pep (represented
by Atkins) had reached a firm agreement as to the price at which
Kedah would
supply shoes to Pep. That price was achieved only after
negotiations which spanned several days. Atkins’s target
prices, communicated
to Cheng, were originally US $4.70 for the men’s
shoes and 4.20 for the youths’ shoes. Cheng countered with
prices of
US $5.20 and 4.65. The prices were ultimately agreed at US
$5 and 4.25, after Cheng had had a spirited telephone conversation
with
a person he told Atkins was a representative of the factory in
mainland China that was going to manufacture the shoes and sell them
to Kedah. Having achieved these prices after thorough negotiation,
the question arises: Why would Cheng subsequently have agreed
substantially lower prices of US $3.20 and 2.95 with Wan of Textrade,
or anyone else on behalf of Trend?
[18] Essop suggested two reasons. First, he said that
according to Pep, Kedah had on hand about 1.3 million pairs of
surplus or excess
stock which it had been struggling to sell for a
year or eighteen months. Essop’s daughter Khaironesa supported
this explanation.
She said:
‘
Kedah,
at that point, was sitting with the shoes, they wanted to get rid of
them.’
Essop testified that the excess stock was reflected in a
schedule sent to him by Pep which reflected the style numbers Pep
required
and Kedah’s dollar price which Pep was prepared to
pay. Included in the schedule were the men’s and youths’
shoes
which formed part of the first consignment and which were
reflected at US $4.70 and 4.25 respectively. All of this evidence was
conclusively
refuted by the evidence of Atkins. Atkins had
personally, at the end of 1998 ─ ie shortly before Pep
contacted Essop ─
negotiated with Cheng the design and price of
the very shoes that comprised the first consignment. They were a new
line for Pep produced
exclusively for Pep and they bore Pep’s
registered trademark ‘New Yorker’. They were indeed
reflected in the schedule
sent to Essop which he produced in
evidence; but that schedule, according to Atkins, reflected the shoes
in respect of which Pep
did not have import permits and the prices on
the schedule were Pep’s target prices, not the prices Atkins
ultimately agreed
with Cheng. The shoes reflected in the schedule
were therefore, according to Atkins, not surplus stock, nor was it
possible that
Kedah had been trying to sell them for over a year or
more. The reason Pep approached Trend, said Atkins, was not to secure
a job
lot of cheap shoes for sale in South Africa as Essop suggested,
but in order to transport the shoes, once they had been manufactured,
from Hong Kong to South Africa under permits to which Trend had
access and Pep did not. Atkins said categorically that it was
‘impossible’
for the shoes in the first consignment to
have been surplus stock and he was not challenged on this in
cross-examination.
[19] The second reason advanced by Essop as to why Kedah
may have been prepared to drop its prices, was this. Essop and both
his daughters
emphasised that at the time Pep wanted to bring the
shoes to South Africa, import permits were a scarce and valuable
commodity. This
evidence was confirmed by Atkins. The suggestion was
therefore that, although Cheng of Kedah had agreed the shoe prices
with Atkins,
the shoes still had to be imported into South Africa ─
and that placed the party negotiating on behalf of Trend, Wan of
Textrade,
in a strong position to negotiate with Cheng because,
whatever price had been agreed between Pep and Kedah, the shoes could
simply
not be imported into South Africa without permits. The first
problem with this explanation is that there is no evidence whatever
to suggest that Wan did negotiate with Cheng on this basis. The
second problem is that the explanation is highly improbable. Kedah
had, after careful negotiation, agreed a firm price with Atkins of
Pep. There was never at any stage a suggestion that the supply
of
shoes by Kedah to Pep was dependent upon permits being obtained. The
price agreed upon between Cheng and Atkins was FOB Hong Kong.
Kedah’s
responsibility therefore ceased when it delivered the shoes to the
ship. Had someone such as Wan of Textrade attempted
to negotiate a
lower price with Kedah because of a shortage of permits, the
probabilities are overwhelming that Cheng would have
contacted Pep,
both to complain about an attempt to renegotiate the price and to
question the basis upon which this was being attempted.
And Pep, in
turn, would have required an explanation from Essop as to why Trend’s
agent was attempting to renegotiate the price
which it had negotiated
with Cheng, which Essop’s own evidence established had been
communicated to him and which Pep required
Essop to take into account
in fixing Trend’s price to Pep for purchasing, importing and
delivering the shoes to Pep. None of
this happened.
[20] Counsel representing Trend emphasised that the
number of shoes imported in the first consignment (60 228) was
not significant
when regard is had to the total number of shoes Kedah
had agreed to supply to Pep for 1999 (some 40 million); and counsel
also emphasised
that the price at which Kedah purchased the goods
from the factory in mainland China was not known. But none of this
explains why
Cheng would have been prepared to reduce his profit at
all (the difference between the price agreed with Atkins of Pep and
the price
Trend contends must have been negotiated by Textrade
amounts to nearly US $100 000) or to submit to a questionable
business
practice consisting in an attempt to renegotiate an agreed
price ─ especially when the basis on which the supposed
negotiation
took place (shortage of permits) was not his concern.
[21] Then there is the expert evidence of Atkins. Atkins
was an extremely experienced shoe buyer. He had been employed by Pep
for
19 years in its factory producing footwear and a further 21 years
as senior buyer for all male footwear. The function of a buyer,
in
his own words, was to ‘acquire the right product at the right
price at the right time’ and he went all over the world,
as he
put it, to ‘ferret out or look for . . . markets or areas that
produced cheap footwear’. In the middle of the negotiations
he
held with Cheng towards the end of 1998, he attended a product fair
at Guangzhou for the primary purpose of ensuring that the
estimated
prices he had given Cheng, which were slightly less than the prices
later agreed upon, were realistic. Atkins expressed
the opinion in
his evidence in chief that it was ‘impossible’ for Trend
to have paid the prices it said it paid to Textrade.
In
cross-examination he said:
‘
As
far as I am concerned the prices quoted [ie those which Trend said it
paid to Textrade] as I said earlier on, were totally and
completely
improbable, whether out of China, whether out of India, whether out
of Pakistan. And the exposure that we got in the middle
trip to go to
China, to . . . look at prices of styles or leather casuals or
whatever [at the trade fair in Guangzhou], we never,
ever came close
to those prices. They [the Guangzhou prices] were far above the
prices that we [ie Pep] eventually paid.’
Atkins made a positive impression on the court
a
quo
. His evidence, born of considerable
experience worldwide and based in particular on the price of shoes in
mainland China at about
the time Wan of Textrade would (according to
Essop) have been negotiating with Cheng of Kedah, was not called into
question and there
is no reason why it should not be accepted.
[22] There is a feature of the case which favours
Trend’s version. The SARS investigators have not, despite the
wide powers
conferred in them by s 4(4)(a) of the Act, been able to
show that Trend paid anything more for the shoes than the amounts
reflected
in the Textrade invoices, and this despite the fact that
they knew Trend’s contentions and had access to Trend’s
records
and directly to its bank for a number of years before
evidence was heard in the court below. Essop and his two daughters
explained
in detail how the documents sent to them by Textrade were
used to clear the shoes through customs and to make payment through
Trend’s
bank to the beneficiary designated by Textrade, and
denied that there had been any further payment. Had the SARS
inspectors been
able to show the contrary, the case against Trend
would have been proved conclusively. But not even the criminal law
requires conclusive
proof.
[23] I bear in mind that a finding in favour of the
Commissioner of necessity involves finding that Trend attempted to
defraud the
fiscus, that false documents had been produced and that
Essop and his daughters committed perjury; and that illegal conduct
is inherently
unlikely. I am nevertheless of the view that this
notwithstanding, the probabilities constituted by the absence of any
reason why
Kedah should drop the prices it had agreed with Pep and
the expert evidence of Atkins that the prices contended for by Trend
are
impossibly low, together with the fact that Essop did not
favourably impress the court
a quo
as a witness, tilt the scales in favour of the
Commissioner. I accordingly conclude that Trend did not discharge the
onus on it and
that its cross-appeal against the assessment by the
Commissioner of the transaction value of the first consignment should
be dismissed.
[24] I turn to consider the appeal lodged by the
Commissioner against the order of the court
a
quo
that the amounts of R300 000 and
R600 000 paid as security for the possible underpayment of
customs duty and VAT in respect
of the second and third consignments,
should be refunded. The court
a quo
found that there was an agreement between the
representatives of the Commissioner and the representatives of Trend
that, if the amounts
concerned were paid, the shoes would be
released; and that it was a tacit term of that agreement that if a
determination in respect
of Trend’s liability for underpayment
were not made within a reasonable time, the amounts would be
refunded. With respect,
I cannot agree with this analysis of the
legal position.
[25] The Commissioner acted in terms of s 93(1)(c) of
the Act
3
by releasing the second and third consignments subject
to the condition that payments of R300 000 and R600 000 be
lodged.
4
In so doing, the Commissioner acted from a position of
authority and implemented the legislation which conferred on him the
power
to impose conditions should he direct that goods detained or
seized be delivered to their owner. The Commissioner was an organ of
State as defined in s 239 of the Constitution because he was a
‘functionary . . . exercising a public power . . . in terms
of
any legislation’ and he performed an administrative action, as
defined in s 1 of the Promotion of Administrative Justice
Act 3 of
2000 (‘PAJA’), the relevant part of which reads:
‘”
Administrative
action” means any decision taken, or failure to take a
decision, by . . . an organ or State, when . . . exercising
a public
power . . . which adversely affects the rights of any person and
which has a direct, external legal effect . . .’.
There may have been a contractual element in the
exercise by the Commissioner of his statutory powers (in as much as
Trend was free
to accept or reject the condition imposed) but that
does not derogate from the fact that the Commissioner performed an
administrative
action.
5
[26] Counsel representing the Commissioner submitted
that the proper order would be one directing the Commissioner to
determine the
transaction value of the goods forming part of the
second and third consignments, as he did in the case of the first
consignment.
Counsel relied on that part of the definition of
‘administrative action’ in PAJA which includes any
failure to take a
decision, and on the provisions of ss 6(2)(g) and
(3) and 8(2)(a) of PAJA. Those sections provide:
‘
6(2)
A court . . . has the power to judicially review an administrative
action if ─
. . .
(g) the action concerned consists of a
failure to take a decision.
. . .
(3) If any person relies on the ground of
review referred to in subsection (2)(g), he or she may in respect of
a failure to take a
decision, where ─
(a)(i) an administrator has a duty to
take a decision;
(ii) there is no law that prescribes a
period within which the administrator is required to take that
decision; and
(iii) the administrator has failed to
take that decision,
institute proceedings in a court . . .
for judicial review of the failure to take the decision on the ground
that there has been unreasonable
delay in taking the decision’;
or
‘
(b)(i)
an administrator has a duty to take a decision;
(ii) a law prescribes a period within
which the administrator is required to take that decision; and
(iii) the administrator has failed to
take that decision before the expiration of that period,
institute proceedings in a court . . .
for judicial review of the failure to take the decision within that
period on the ground that
the administrator has a duty to take the
decision notwithstanding the expiration of that period.
8(2) The court . . . in proceedings for
judicial review in terms of s 6(3), may grant any order that is just
and equitable, including
orders ─
(a) directing the taking of the
decision’.
[27] The argument put forward on behalf of the
Commissioner is misconceived. There is no duty on the Commissioner to
make a decision
as contemplated in s 6(3) of PAJA whether under
subsection (a) or (b), both of which (in para (i)) require the
existence of a duty
for them to operate. It happens every day that
goods are imported and no determination by the Commissioner in terms
of s 65(4)(a)
as to their transaction value is made ─ as was
said by the Constitutional Court in the
FNB
case:
6
‘
the Act is premised on a system of self-action
and self-assessment’. Nor does a seizure in terms of s 88(1)(a)
oblige the Commissioner
to make a determination. He has a right, but
no duty, to do so. The sections of PAJA relied on by counsel
representing the Commissioner
are therefore not applicable.
[28] Counsel representing the Commissioner conceded that
if the Commissioner wished in terms of s 65(4)(a) to make a
determination
of the transaction value of goods detained in terms of
s 88(1)(a), he would have to act within a reasonable time; and
further conceded
that a reasonable time has elapsed. Both concessions
were well made. So far as the latter concession of fact is concerned,
years
have elapsed since the goods were seized and there has still
been no determination despite the full co-operation of Trend in
granting
access to its books and despite the wide powers enjoyed by
officers under s 4(4) of the Act. The goods forming part of the
second
and third consignment were seized in about August 1999. The
payments to secure their release were made on 20 August and 1
September
1999 respectively. The notice of motion commencing the
proceedings in the court below was dated 9 October 2001 ─ more
than
two years later.
[29] So far as the concession of law is concerned, it
was common cause that the goods were detained in terms of s 88(1)(a)
of the
Act. In terms of the words of that section, such detention is
‘for the purpose of establishing whether . . . goods are liable
to forfeiture under this Act’. A limitation must be read into
that section to the effect that the right to detain goods only
endures for a period of time reasonable for the investigation which
the section contemplates to be made, but no longer. There is
no
sufficient reason for the continued deprivation of the property once
the purpose for the deprivation (to investigate whether the
property
is liable for forfeiture under the Act) is no longer justified, and
the continued deprivation would accordingly be arbitrary
as meant by
s 25 of the Constitution: see the
FNB
case.
7
The Commissioner’s right to retain provisional
payments made pursuant to a condition for the release of the goods
imposed by
him in terms of s 93(1)(c), must be subject to the same
limitation. I therefore conclude that once a reasonable period of
time for
the necessary investigation has elapsed, the Commissioner
has no further right to retain either the goods or provisional
payments
made to secure their release.
[30] The order sought by counsel representing the
Commissioner would direct the Commissioner to make a determination
which he is not
obliged to make and which would be incompetent
because the time within which it could have been made has expired. In
view of the
conclusion that the Commissioner no longer has the right
to retain the provisional payments made in respect of the second and
third
consignments, the order by the court
a
quo
directing the Commissioner to repay them
must stand and the appeal by the Commissioner must fail.
[31] The court
a quo
ordered the Commissioner to pay all of Trend’s
costs incurred in that court. The Commissioner appealed against that
order as
well. Counsel representing Trend correctly conceded that
(save for the costs of the day on 5 November 2002) such an order was
not
justified insofar as it included the costs in connection with the
application for, and hearing of, oral evidence. The issues referred
to evidence were determined in favour of the Commissioner and Trend
therefore failed on a severable issue: see
Letraset
Ltd v Helios Ltd (2)
;
8
Fripp v Gibbon and Co
.
9
The Commissioner’s counsel did not contest
liability for the costs of the day on 5 November 2002 but there was a
dispute in
regard to the costs of the first day on which oral
evidence was heard, ie 17 May 2004, and of the following day, 18 May
2004. Although
some evidence was heard on 18 May, the rest of those
two days was taken up by an application for condonation made by the
Commissioner
for late discovery. Those costs should be awarded to
Trend but the remainder of the costs against Trend. The taxing master
must make
an appropriate apportionment. Otherwise, Trend was
substantially successful: the penalty of R695 508 imposed by the
Commissioner
in lieu of forfeiture in respect of the first
consignment was set aside and the Commissioner was ordered to repay
the amounts of
R300 000 and R600 000 paid by Trend as
security for the release of the second and third consignments. Trend
failed in respect
of the determination amounting to R363 371,09
in respect of the first consignment, but it had to come to court to
obtain the
relief it did.
[32] The Commissioner has been partially successful in
the appeal. The costs of the referral to oral evidence are likely to
be substantial.
Liability for those costs (save to the extent set out
above) was conceded by Trend’s counsel in his heads of
argument; but
the fact remains that the Commissioner had to come to
this court to have the order of the court
a
quo
amended. Trend, on the other hand, was
also partially successful in this part of the appeal in that not all
of the costs of the referral
to oral evidence will be awarded to the
Commissioner. As presently advised, it seems to me that an order
directing Trend to pay half
the costs of the appeal would be fair. We
have not had the benefit of argument from counsel so a provisional
order will be made in
respect of the costs of the appeal. So far as
the cross-appeal is concerned, the court
a quo
was incorrect in the reasons it gave for the order
directing the Commissioner to repay the amounts paid in respect of
the second and
third consignments but the order remains unaffected.
Costs should accordingly follow the result. The complexity of the
issues, both
factual and legal, warranted the employment of two
counsel by the Commissioner.
[33] The following order is made:
1. The appeal succeeds to the extent that the costs
order made by the court
a quo
is
set aside and the following order is substituted in its place:
‘
(i) Subject to (ii) below, the
applicants are ordered to pay the costs incurred in connection with
the hearing of oral evidence including
the costs of two counsel save
for the costs of the day of 5 November 2002, which are to be paid by
the first respondent.
(ii) The costs incurred on 17 and 18 May 2004 are to be
apportioned between the parties as determined by the taxing master.
The costs
awarded to the first respondent shall include the costs of
two counsel.
(iii) Save as set out above, the first respondent is
ordered to pay the applicants’ costs.’
2. Save as aforesaid, the appeal is dismissed.
3(1) The first and second respondents are provisionally
ordered to pay half of the appellant’s costs of appeal,
including the
costs of two counsel.
(2) Either party may, on or before 14 June 2007, submit
written argument to the Registrar of this court in regard to the
provisional
order made in (1), in which event the other party shall
be entitled to reply on or before 29 June 2007. If no written
argument is
forthcoming the provisional order made in (1) shall
become final.
4. The cross-appeal is dismissed, with costs, including
the costs of two counsel.
Concur: Howie P __________
Heher JA T D CLOETE
Van Heerden JA JUDGE OF APPEAL
Combrinck JA
1
Since
the events relevant to this appeal further powers, inter alia to
detain any goods in order to determine whether the provisions
of the
Act or any other law have been complied with as contemplated in s
107(2)(a) of the Act, have been conferred on officers
in terms of s
4(8A), inserted into the Act by s 133(b) of Act 45 of 2003.
2
Section
128 of Act 60 of 2001 which amended s 65(4)(a) reads ‘and may
be determined’ not ‘or may be determined’.
If
regard is had to s 128(a) of that Act as it appears in Government
Gazette 22923 of 12 December 2001, it is clear that the word
‘and’
was inserted accidentally in place of the word ‘or’. The
Afrikaans version of the amending Act still
reads ‘of’.
3
‘
93(1)
The Commissioner may on good cause shown by the owner thereof,
direct that any . . . goods seized . . . under this Act be
delivered
to such owner, subject to ─
. . .
(c) such conditions as the Commissioner may determine, including
conditions providing for the payment of an amount not exceeding
the
value for duty purposes of such . . . goods plus any unpaid duty
thereon.’
4
It
is not necessary to consider whether the Commissioner could also
have acted in terms of s 107(2)(a) of the Act.
5
cf
Logbro Properties CC v Bedderson NO
2003 (2) SA 460
(SCA) para 9;
Bullock
NO v Provincial Government, North West Province
2004
(5) SA 262
(SCA) paras 11 and 12.
6
First
National Bank of SA Ltd t/a Wesbank v Commissioner, South African
Revenue Service
;
First
National Bank of SA Ltd t/a Wesbank v Minister of Finance
[2002] ZACC 5
;
2002 (4) SA 768
(CC) para 15.
7
ibid
para 100.
8
1972
(3) SA 605
(A) at 608B-D.
9
1913
AD 354
at 358.