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[2023] ZAWCHC 329
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Karino Homeland Distribution (Pty) Ltd v Commissioner for the South African Revenue Service (21279/2023) [2023] ZAWCHC 329 (27 December 2023)

IN THE HIGH COURT OF
SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No: 21279/2023
In
the matter between:
KARINO
HOMELAND DISTRIBUTION (PTY) LTD
Applicant
and
THE
COMMISSIONER FOR THE
SOUTH
AFRICAN REVENUE SERVICE
Respondent
Heard:
12 December 2023
Judgment
delivered: 27 December 2023 (electronically)
JUDGMENT
LEKHULENI
J
[1]
This is an application in which the applicant seeks a partial
upliftment of a lien imposed over
its goods by the respondent
("Sars")
in terms of section 114 of the Customs and
Excise Act 91 of 1964
("the Customs and Excise Act")
as security for an admitted debt. The applicant contends that the
value of the goods attached in terms of the statutory lien far

exceeds the debt it owes the applicant in that the lien cannot
operate concerning subsequent debts that may have been incurred
in
favour of Sars. To this end, the applicant seeks an interdict
compelling Sars to reduce the lien to an amount sufficient to
serve
as security for the debt in respect of which it was imposed. The
applicant contends that Sars has abused the provisions of
section 114
of the Customs and Excise Act to retain goods under lien more than is
required to secure the applicant's debt to Sars
regarding a
consignment of goods destined for Mozambique.
[2]
In addition, the applicant seeks an order for Sars to release a
portion of the goods in bond to
enable it to trade and generate
sufficient income to discharge its indebtedness to Sars. Sars opposed
the applicant's application
and raised three preliminary points,
namely: that the matter is not urgent, that the applicant did not
comply with section 96 of
the Customs and Excise Act, and that the
applicant failed to comply with the provisions of section 24 of the
Superiors Courts Act
10 of 2013. I will deal with these preliminary
points later in this judgment. However, to fully understand the view
I take in this
matter, and the reasons that fortify my conclusion, I
deem it prudent to sketch out briefly the facts underpinning the
dispute
between the parties.
THE
FACTUAL BACKGROUND
[3]
On 16 December 2022, the applicant imported into South Africa from
Namibia a shipment of alcohol
that was declared to be in transit to
Mozambique. The customs value of the said consignment was R839
089.00. The consignment consisted
of various whiskeys, gins, and
vodkas from King Robert distillery in Scotland. This consignment was
in transit through South Africa
and never destined for domestic sale
or consumption; instead, it was destined for Mozambique. As a result,
no levies or value-added
tax was raised on import to South Africa. On
importation to South Africa, under such circumstances, liability for
duties and VAT
is incurred but is deferred. When proof of due export,
in this case to Mozambique, is provided to Sars, such liability is
acquitted
or extinguished in terms of section 18A(3) of the Customs
and Excise Act.
[4]
On 20 December 2022, Sars requested the applicant, via email, to
provide the consignment's whereabouts
and the liquor's full delivery
address in Mozambique. The applicant indicated through its official
that it was unaware of the shipment
but would check it and revert.
Sars forwarded a full description of the
consignment
to
the applicant via email with all the details relating to the import.
Despite several correspondences and email exchanges between
the
parties, the applicant failed to provide Sars with proof that the
consignment imported from Namibia was indeed exported to
Mozambique.
[5]
Subsequently, Sars believed that the applicant diverted the
consignment into local consumption
in South Africa without duties and
VAT being paid to the fiscus. Sars also held the view that had the
said consignment been legitimately
exported, the requested
documentation would have been available for inspection by Sars. On 08
February 2023, Sars issued its letter
of finding and notice of
intention to raise a debt against the applicant.  In the
correspondence, Sars informed the applicant
that it intended to hold
them liable for duties and VAT,
totalling
R3,077,807.55.
On 10 March 2023, Sars provided the applicant with additional
information about the documents required for the shipment.
These
documents included the name of the transporter, the name of the
individual who removed the goods from the bonded warehouse,
a
confirmation of the contract with the bonded warehouse where the
goods would be stored, and details of the buyer in Mozambique.
The
applicant did not provide the required information. As a result, Sars
issued a letter of demand on 13 June 2023, demanding
payment of R3
077 807.55 for duties and VAT related to the liquor consignment.
[6]
Subsequent thereto, on 21 July 2023, Sars detained the total stock
value of the applicant's goods
at Real Africa's Paarden Island
warehouse facility and imposed a lien thereto, in terms of section
114(1)(a)(iv) of the Customs
and Excise Act. The value of the goods
subject to the lien was approximately R10 million, more than the
amount of debt the applicant
owes Sars. On 27 July 2023, the
applicant, realising that it could not produce proof of exportation
of the consignment to Mozambique
that Sars required, admitted
liability, and submitted a proposal request to settle the debt due to
Sars. The applicant submitted
a deferred payment arrangement
application to Sars, which was considered and rejected.
[7]
On 25 August
2023
, Sars addressed a
correspondence to the applicant and informed the applicant that the
section 114 lien in terms of the Act, will
remain in effect until the
entire debt has been liquidated. Sars also informed the applicant
that this is not negotiable and that
whilst this measure may seem
draconian, it deemed it necessary in these circumstances of
intentional fraudulent tax evasion. Sars
further informed the
applicant that these measures were necessary for this case. In
addition, Sars informed the applicant that
it was willing to release
goods worth R 3,967,986.50, including interest, to be sold and the
proceeds paid immediately to Sars
to liquidate the debt. Upon
extinguishing the debt, Sars stated, it would release all detained
goods immediately. The applicant
did not accept this proposal and
made a counterproposal which Sars rejected. On 26 September 2023,
Sars advised the applicant that
it had calculated the customs value
of the goods under lien, which amounted to R10 396 239.28. The
applicant accepted the calculation
as correct; however, several
proposals were made to settle the debt, which Sars rejected.
[8]
On 4 September 2023, the applicant emailed Sars a notice of intention
to institute proceedings
in terms of section 96(1)(a) of the Customs
and Excise Act for the immediate lifting of the lien imposed over its
goods under bond
attached in terms of section 114 of the Customs and
Excise Act. The applicant also informed Sars that in the intended
legal proceedings,
the applicant would request the court to make an
order to lift the lien because countless acceptable and varied forms
of security
have been provided but have not been adjudicated by Sars.
In response, Sars expressed its willingness to accommodate the
applicant
by partially releasing goods subject to the lien to retain
goods to the customs value of the debt and interest plus 20 per cent.

According to Sars, this concession was made on the understanding that
the Mozambique debt was the only outstanding debt and that
the
applicant had otherwise complied with its obligations in terms of the
Act.
[9]
On 3 October 2023, Sars issued another notice to raise tax debt
against the applicant for a different
consignment that was destined
for Zimbabwe. Sars informed the applicant that the letter of intent
to raise a debt relates to another
shipment of liquor that the
applicant did not export but instead, diverted to South Africa
without paying duties and VAT. The intended
liability in terms
thereof was for R3 997 749.23. Sars informed the applicant that this
debt was due for the purposes of section
114. The applicant disputed
liability regarding this debt and asserted that it provided Sars with
all the required documentation
and information as proof that the
second consignment to Zimbabwe was properly exported. The applicant
asserted that it also provided
its bank statement as proof that the
recipient in Zimbabwe indeed paid for the exported goods. On the
other hand, Sars averred
that the acquittal documents that the
applicant provided have been falsified and forged.
[10]
In addition, Sars contended that the applicant has failed to produce
any evidence that the goods were indeed
exported to Zimbabwe. Sars
asserted that the applicant has not provided evidence or explanation
for why it should not be held liable
for the additional duties, VAT,
and forfeiture regarding the second debt (Zimbabwe consignment). As a
result, Sars incorporated
the second debt as part of the section 114
lien concerning the Mozambique debt. The applicant did not admit
liability for the second
debt. In this application, the applicant
seeks an order for Sars to reduce the lien on the applicant's
attached property to R4350
042.49.  In simpler terms, the
applicant requests that Sars be ordered to detain goods worth the
admitted debt and to release
the remaining goods to the applicant.
PRELIMINARY
ISSUES
[11]
As stated above,
Sars has raised three points in
limine
to the applicant’s application:
11.1
That the application is not urgent, alternatively, that the urgency
was self-created.
11.2
That there has been non-compliance with section 96 of the Customs and
Excise Act; and
11.3
That the applicant did not give it sufficient time to oppose the
application as required by
section 24
of the
Superior Courts Act, 10
of 2013
.
[12]
For brevity and completeness, I will deal with these preliminary
points,
ad seriatim
.
Urgency
[13]
Sars took issue with the urgency with which this application was
brought. Mr Peter, who appeared for Sars,
submitted that the lien has
been in place since July 2023 for almost five months, and there is no
justification for the apparent
urgency with which this application
has been brought. If the applicant has cash flow difficulties,
Counsel contended, it ought
to approach its bankers, whose function
is to assess credit, obtain credit, and discharge its indebtedness to
Sars. Mr Peter further
contended that in the notice of intention to
institute legal proceedings in terms of section 96 of the Customs and
Excise Act,
the applicant claimed urgency and requested Sars to
consent to the reduction of the period of 30 days set out in the
section to
five days for the applicant to institute the proceedings.
Even so, the applicant did not proceed with the threatened action but

only instituted this application with a truncated period at the
beginning of December 2023.
[14]
Mr Peter submitted further that the case that the applicant makes for
urgency is the necessity to trade over
the Christmas period. Apart
from the fact that this was self-created urgency, so the contention
proceeded, the application overlooks
the fact that the applicant has
entirely within its own power to remove the lien by simply paying the
debt it owes. The admitted
debt in respect of the first transaction
is over a year old and relates to imported goods that have never been
accounted for since
December 2022. To this end, Mr Peter argued that
the urgency in this matter was occasioned by the applicant's failure
to pay its
statutory indebtedness.
[15]
Mr Bothma, who appeared for the applicant, submitted that the urgency
in this matter arises from the applicant's
need to access the goods
to trade during the festive season in December. Counsel submitted
that should the applicant not be able
to sell the goods (or at least
such portion that is not necessary to secure Sars's debt), it will
have disastrous consequences
for its continued operation. It was
submitted on behalf of the applicant that the goods under lien, which
mainly comprise of high-end
liquor, is an ongoing expense for the
applicant in the form of holding costs and was destined for sale over
the December period.
If a portion of the property, which is not
necessary to secure Sars’s debt, is not released from
attachment, it would have
disastrous consequences for the applicant's
continued operation. Mr Bothma submitted that should the applicant
not be able to trade
over December, there is a high likelihood that
it would face commercial insolvency, placing at risk not only its own
business but
the livelihood of its 12 employees. It was submitted
that the delay in launching this application, which was occasioned by
bona
fide attempts to reach a practical settlement with Sars, cannot
be held against the applicant about urgency.
[16]
In terms of Rule 6(12) of the Uniform Rules of Court, an applicant
is, in law, required to set out the circumstances
which justify the
hearing of an application on an urgent basis and the basis on which
it contends that it would not obtain substantial
redress at a hearing
in due course. As correctly pointed out by Mr Peter, Rule 6(12)(b)
requires two things of an applicant in
an urgent application.
First,
the applicant must set forth explicitly the circumstances that he
avers render the matter urgent and,
secondly,
the reasons why
he claims that he would not be afforded substantial redress at a
hearing in due course.
[17]
It is irrefutable that the parties engaged in settlement negotiations
in this matter. From the time Sars
sent a demand to the applicant,
the parties discussed the matter. The applicant made proposals for
the payment of the debt and
even made an application for the deferred
payment arrangement for the admitted debt. Among others, on 20 August
2023, the applicant
proposed to settle the tax liability for the
Mozambique consignment by paying the sum of R250,000 per month for
three months while
settlement negotiations between the parties were
ongoing. The negotiations continued even after the notice to
institute proceedings
against Sars in terms of section 96 of the Act
was issued. To be precise, the discussions between the parties
continued ever since
the lien was imposed until November 2023.
[18]
Given all these considerations, it cannot be said that the urgency
was self-created. The argument that urgency
was self-created is
hollow and is not supported by the objective facts. The applicant
made efforts to resolve the issue without
resorting to legal action,
as evidenced by the correspondences submitted. In
Transnet
Ltd vs Rubenstein
2006 (1) SA 591
SCA, it was held that where a
litigant had endeavoured to settle the matter and had brought an
urgent application after the attempts
to settle the matter because of
the delay occasioned by the attempt to settle had failed, the
applicant should not be deprived
of his costs and that it could not
be argued that a litigant had been the author of his own urgency.
[19]
The same principle applies with equal force in this matter. Thus, a
party who brings his application urgently
under Rule 6(12) of the
Uniform Rules after endeavouring genuinely in settlement negotiations
should not be punished or prejudiced
for non-compliance with this
rule when he later brings the application after the negotiations have
fallen through. In such circumstances,
as in this matter, it cannot
be said that urgency is self-created.
[20]
Whilst I note the applicant's indebtedness to Sars, which I will deal
with in due course, I am of the view
that the applicant was justified
to bring this matter urgently as it did. Thus, Sars's first
preliminary point must fail. I turn
to consider the second
preliminary point.
Did
the applicant comply with section 96 of the Customs and Excise Act?
[21]
For the sake of completeness, section 96(1) of the Customs and Excise
Act provides as follows:
“
96
Notice of action and period for bringing action
(1)(a)(i)   No
process by which any legal proceedings are instituted against the
State, the Minister, the Commissioner
or an officer for anything done
in pursuance of this Act may be served before the expiry of a period
of one month after delivery
of a notice in writing setting forth
clearly and explicitly the cause of action, the name and place of
abode of the person who
is to institute such proceedings (in this
section referred to as the ‘litigant’) and the name and
address of his or
her attorney or agent, if any.”
…
..
(iii)
No such notice shall be valid unless it complies with the
requirements prescribed
in the section…’
(c)(i)
The State, the Minister, the Commissioner an officer may on good
cause shown reduce
the period specified in paragraph (a)…’
[22]
From a careful reading of this section, it is distinctly discernible
that a taxpayer intending to institute
proceedings against Sars for
anything done in pursuance of the Customs and Excise Act must issue a
written notice that must comply
with section 96 of the Act. Legal
proceedings may only be initiated after the expiration of one month
from the date of delivery
of the notice to Sars. The one-month period
may be reduced by the Commissioner and failing which by the court
where the interest
of justice so requires.
[23]
Crucially, the notice must comply with three requirements:
First
,
the notice must set forth clearly and explicitly the cause of action
an applicant relies on. Thus, when a notice is given, the
proceedings
that follow must have been set forth clearly and explicitly in the
notice, and relief cannot be claimed on a basis
other than what is
set out in the notice.
Secondly,
the notice must set forth the
details of the litigating party (his name and place of abode).
Thirdly
, the notice must set out the name and address of the
litigating party's attorney or agent, if any.
[24]
In this case, Sars does not take issue with the details of the
litigating party or with the names of its
attorneys but instead
contends that the section 96 notice delivered to Sars did not set out
the cause of action that is relied
upon by the applicant in this
application. In other words, Sars contends that the cause of action
set out in the section 96 notice,
differs materially from the cause
of action set out in the application. Mr Peter contended that the
applicant's section 96 notice
issued to Sars on 3 September 2023 did
not set out the cause of action relied upon by the applicant in this
application. As such,
this court cannot entertain the applicant's
application. Mr Peter further submitted that the claim that Sars has
abused or acted
unreasonably under section 114 in either placing the
initial detention or continuing to retain the goods in the face of
offers
from the applicant, was never the cause of action in the
section 96 notice. According to Mr Peter, the section 96 notice was
limited
to a constitutional challenge to the provisions of section
114. I do not agree with this proposition.
[25]
Throughout the various correspondences exchanged between the parties,
specifically the section 96 notice,
the applicant expressed its view
that Sars abused its lien in terms of section 114 of the Customs and
Excise Act. It expressed
the view that Sars cannot attach its goods
to the debt for the Mozambique consignment and still use the same
lien to attach goods
for a different consignment. The applicant
further informed Sars that it has a right in terms of section 22 of
the Constitution
to trade and that Sars's interpretation of section
114 of the Customs and Excise Act infringes on this right for which
it has no
alternative remedy. To this end, the applicant sought an
interdict effectively compelling Sars to permit it to trade by
releasing
some of its stock under attachment.
[26]
While I note the constitutional grounds raised in the section 96
correspondence, I am of the view that a
contextual reading of the
section 96 notice sets out a consistent cause of action that the
applicant relied on in its application.
My conclusion on this
preliminary point is that the cause of action relied upon by the
applicant in this application is clearly
set out in the section 96
notice. Thus, Sars's second preliminary point must fail. I turn to
consider the nature and import of
section 24
of the
Superior Courts
Act and
how it should be applied.
Did
the applicant comply with
section 24
of the
Superior Courts Act?
[27
]
Mr Peter submitted that the applicant sought final relief in these
proceedings without complying with the provisions
of
section 24
of
the
Superior Courts Act 10 of 2013
. Counsel further submitted that in
terms of section 24, the time allowed for entering an appearance to
civil summons to be served
outside the area of jurisdiction of the
division in which it was issued, shall not be less than one month if
service takes place
more than 150km from the court out of which it
was issued and two weeks in any other case. According to Mr Peter,
the notice of
motion in this application was issued out of the
Western Cape High Court. It was served upon the respondent in
Pretoria, more than
150km from the courthouse. The applicant did not
allow the
dies
provided in section 24 of the Superior Cours
Act.
[28]
Simply put, Mr Peter argues that
a party is not entitled to
bring an urgent application for final relief against a respondent who
resides outside of the jurisdiction
of the court from which the
application is brought where there was no compliance with the notice
period set out in
section 24
of the
Superior Courts Act. Counsel
relied on
Shield Insurance Co Ltd v Van Wyk
1976 (1) SA 770
(NC), a matter in which the full court held that the term ‘civil
summons’ in
section 27
of the Supreme Court Act 59 of 1959 also
referred to motion proceedings on account of the definition of the
term “civil summons”
in the Act. As a result, Counsel
argued, pursuant to the
Shield Insurance Co Ltd v Van Wyk
decision, the consequence was that no urgent application for final
relief could be brought without compliance with the notice period
set
out in that section.
[29]
Mr Bothma, on the other hand, submitted that
Section 24
of the
Superior Courts Act has
not yet enjoyed judicial consideration but
contended that this section does not apply to motion proceedings. Mr
Bothma further
submitted that because the term 'civil summons' is not
defined in the
Superior Courts Act to
include motion proceedings, its
ordinary meaning should apply. He submitted that
section 24
of the
Superior Courts Act must
be interpreted to apply only to action
proceedings. Counsel noted that urgent applications for final relief
brought against a respondent
who resides out of the jurisdictional
area of a particular division should be determined in accordance with
the provisions of Rule
6(12) of the Uniform Rules and the safeguards
that apply in that regard. In his view, interpreting
section 24
of
the
Superior Courts Act to
exclude motion proceedings is also in step
with a modern constitutional dispensation that envisages the right of
access to courts.
[30]
In addition, Mr Bothma submitted that the contention that a litigant
who seeks urgent relief by motion proceedings
must travel to the
court of the respondent does not advance the spirit of the
Constitution as it effectively ousts the jurisdiction
of a court to
assist litigants in circumstances where it would otherwise have such
jurisdiction. To this end, Counsel submitted
that this could never
have been the legislature's intention.
[31]
Before I can consider the correct interpretation of section 24 of the
Superior Courts, I deem it prudent
to set out the provisions of this
section verbatim. This section provides as follows:
“
Time allowed
for appearance
24. The time allowed for
entering an appearance to a civil summons served outside the area of
jurisdiction of the Division in which
it was issued, shall not be
less than–
(a)   one month
if the summons is to be served at a place more than 150 kilometres
from the court out of which it was
issued; and
(b)   two weeks
in any other case.”
[32]
Section 27 of the Supreme Court Act 59 of 1959, which preceded
section 24
of the
Superior Courts Act, provided
as follows:
“
The
time allowed for entering an appearance to
a
civil summons
served outside the area
of jurisdiction of the court in which it was issued shall be not less
than –
(a)
twenty-one
days if the summons is to be saved at a place more than 100 miles
from the court out of which it was issued; and
(b)
14
days in any other case.”
[33]
Section 1 of the Supreme Court Act 59 of 1959, defined
civil
summons
as follows –
“
any summons
whereby civil proceedings are commenced, and includes any rule
nisi
,
notice of motion or petition the object of which is to require the
appearance before the Court out of which it is issued of any
person
against whom relief is sought in such proceedings or of any person
who is interested in resisting the grant of such relief.”
[34]
Notably, the
Superior Courts Act does
not define the word ‘civil
summons’. In interpreting the provisions of this section this
court is bound by the principles
espoused in
Natal Joint Municipal
Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) at
para 18, where the court stated that the interpretation of
legislation or documents must be made considering the language
of the
Act, its context and purpose together with the potential consequences
of different interpretation. In my view, in addition
to this
authority, there is also an injunction in section 39(2) of the
Constitution which enjoins courts, when interpreting any
legislation,
to promote the spirit, purport, and objects of the Bill of Rights. An
interpretation of this provision that better
promotes the spirit,
purport and objects of the Bill of Rights must be adopted.
[35]
C
onsistent with the tenets of statutory
interpretation set forth above,
section 24
of the
Superior Courts Act
must
be given its grammatical meaning unless doing so would result in
an absurdity. See
Cool Ideas 1186 CC
v Hubbard and Another
2014 (4) SA
474
(CC) para 28. This should be done consistent with the three
interrelated riders to this general principle, namely: that statutory

provisions should always be interpreted purposively; the relevant
statutory provisions must be properly contextualised; and that
all
statutes must be construed consistent with the Constitution, that is,
where reasonably possible, legislative provisions ought
to be
interpreted to preserve their constitutional validity.
[36]
As explained above, in
Shield Insurance Co Ltd v Van Wyk (supra),
the court relied on the definition of civil summons in the Supreme
Court Act 59 of 1959 in concluding that the words civil summons
in
section 27 also referred to motion proceedings. Section 24 of the
Superior Courts Act sets
out the time allowed for entering an
appearance to a civil summons served outside the area of jurisdiction
of the court in which
it was issued. In my considered view, the
section is intended to allow an opposing party who is situated
outside the court's jurisdiction
where the process is issued
sufficient opportunity to enter its appearance if it intends to
oppose or defend an application. This
is consistent with the right of
access to courts in terms of section 34 of the Constitution.
[37]
Crucially,
section 24
of the
Superior Courts Act refers
to 'entering
an appearance', which, in my view, applies with equal force in both
action and motion proceedings. Filing a notice
of intention to defend
or filing a notice to oppose equates to entering an appearance. The
section does not refer to delivering
a notice of intention to defend,
which exclusively applies in action proceedings. It refers explicitly
to 'entering an appearance'.
The 'entering of an appearance'
envisaged in
section 24
of the
Superior Courts Act may
be a notice of
intention to defend. It may also be a notice of intention to oppose
an application in terms of
rule 6.
[38]
The legislature intentionally distinguished 'entering an appearance'
and delivering the notice of intention
to defend. That distinction,
in my view, was for a reason. If this section was exclusively meant
to apply to action proceedings,
as suggested by Mr Bothma, the
legislature would have made that very clear. In my view, a purposive
attribution of meaning to the
phrase 'entering an appearance'
includes delivering a notice to defend or a notice to oppose.
[39]
Furthermore, even though the definition of 'civil summons' has not
been repeated in the
Superior Courts Act, it
is notable that the same
syntax and terminology used in the previous section 27 of the Supreme
Court Act 59 of 1959 has been transplanted
into the new section 24.
Thus, the legislature was aware of the
Shield Insurance Co Ltd v
Van Wyk (supra)
decision when the
Superior Courts Act was
passed.
Hence, it referred to 'entering an appearance’ in
section 24
,
which applies to both action and motion proceedings.
[40]
In addition, Rule 19 of the Uniform Rules refers explicitly to a
defendant in every civil action being allowed
ten days after service
of summons to deliver a notice of intention to defend, either
personally or through an attorney. Clearly,
a notice of intention to
defend applies in action proceedings. To enter an appearance as
envisaged in
section 24
of the
Superior Courts Act is
generic and
includes a notice to oppose in motion proceedings. To this end, I
agree with the submission of Mr Peter that the provisions
of
section
24
and the policy underlying such section are to guarantee a fair and
adequate access to courts on the part of a defendant or respondent

who is required to appear and contest or oppose the relief sought in
the court of other jurisdiction far from the place where the

processes served. In my view, it does not infringe or limit the right
of access to court, but instead, it guarantees the right
of access to
court to a respondent who is based outside the court's jurisdiction
to have ample time to place his case adequately
before court.
[41]
In my view, the words 'civil summons' in
section 24
must be read
contextually with the other text in the whole section and not in
isolation or in a piecemeal fashion. In that way,
it leads one to an
inevitable conclusion that it applies in both motion and action
proceedings. Mr Botham argued that urgent applications
for final
relief brought against a respondent who resides out of the
jurisdictional area of a particular Division, should be determined
in
accordance with the provisions of
Rule 6(12)
and the safeguards that
apply in that regard. I do not agree with this proposition.
Rule
6(12)
cannot trump a statutory provision set out in section 24 of the
Act.
[42]
In my view, Rule 6(12) of the Uniform Rules is subject to the
provisions of
section 24
of the
Superior Courts Act. As
correctly
pointed out by Sars's Counsel, the effect of
section 24
of the
Superior Courts Act in
cases of urgency, would require the plaintiff
or applicant to issue process out of the court where the defendant or
respondent
is situated if the plaintiff or applicant does not wish to
allow for the
dies
outlined in
section 24
of the
Superior
Courts Act for
entering and appearance. Consequently, no urgent
applications for final relief could be brought where there is no
compliance with
the notice periods set out in that section. However,
this statutory prohibition does not apply to cases where interim
relief is
sought through
ex parte
applications. See
Turquoise
River Incorporated v McMenamin
1992 (3) SA 653
and
Scott Hough
(3) SA 425 (OFS)
[43]
The applicant is seeking a final relief in this matter. It has not
given the respondent a period of one month,
as envisaged in
section
24
to file opposing papers. Instead, the applicant instituted this
application in terms of
Rule 6(12)
and gave the respondent three days
to enter an appearance.
Rule 6(12)
does not empower this court to
condone and dispense with the statutory provision set out in
section
24.
In any event, there was no application for such condonation.
Rule
6(12)
only applies to a period laid down by the rules in respect of
intra-jurisdictional service. My conclusion on this preliminary point

is that this court cannot consider this matter in terms of
Rule 6(12)
as the applicant failed to comply with the provisions of
section 24
of the
Superior Courts Act. Notwithstanding this
finding, for the
sake of completeness, I deem it necessary to consider this
application on the merits.
Should
Sars release a portion of the goods attached in terms of
section 114?
[44]
The applicant’s application is hinged on the application of
section 114 of the Customs and Excise Act.
Section 114(a)(iv)(aa)(A)
of the said Act identifies the category of goods that may be
subjected to a lien. The relevant part of
the section provides as
follows:
“
(iv)(aa)(A)
Any imported or excisable goods, vehicles, machinery, plant or
equipment, any goods in any customs
and excise warehouse, any goods
in a rebate store room, any goods in the custody or under the control
of the Commissioner and any
goods in respect of which an excise duty
or fuel levy is prescribed, and any materials for the manufacture of
such goods, of which
such person is the owner, whether imported,
exported or manufactured before or after the debt became so due and
whether or not
such goods are found in or on any premises in the
possession or under the control of the person by whom the debt is
due, may be
detained in accordance with the provisions of subsection
(2) and shall be subject to a lien until such debt is paid”.
[45]
In terms of this section, Sars has the right to exercise a lien over
the goods which are subject to a duty
wherever they may be found as
further security for its debt. To activate the lien, Sars is required
to act in terms of section
114(2) of the Customs and Excise Act,
which provides as follows:
“
(2)(a)  The
Commissioner or an officer may detain anything referred to in
subsection (1)(a) by sealing, marking, locking, fastening
or
otherwise securing or impounding it on the premises where it is found
or by removing it to a place of security determined by
the
Commissioner…”
[46]
Section 114(1)(a)(i) provides that any amount of any duty, interest,
penalty, or forfeiture payable under
the Act is a debt due to the
State when it becomes due. Section 114 (1)b)(i) provides that Sars's
claim over the property subject
to a lien has priority over the
claims of all the other persons. The section offers Sars the power to
detain imported or excisable
goods under the control of the
Commissioner, which is owned by the person by whom the debt is due.
Where such detention is effected,
they are subject to a lien until
the debt is paid. Section 114 creates a mechanism by which Sars
obtains a preferred claim over
a debtor's property as a security for
the payment of a tax liability due by the debtor. Even at common law,
the fiscus enjoyed
hypothec over the property of citizens for the
taxes and dues owing to the State. See
Secretary for Customs and
Excise v Millman
,
No
1975 (3) SA 544
(A) at 548H.
[47]
The applicant contends that Sars is not entitled to place a lien over
all its assets to secure payment of
a debt for which only a portion
would provide sufficient and reasonable security. In a nutshell, the
applicant argues that the
debt owing to Sars is R3 967 986.50 and
relates to the import of goods destined for Mozambique. It conceded
liability for this
debt as it accepted that it is unable to discharge
the onus required of it in respect thereto. In addition, the
applicant contended
that after these proceedings were instituted,
Sars raised another debt for a similar sum of R3 997 749.23
concerning a consignment
of goods imported into South Africa and
destined for Zimbabwe. The applicant stated that it does not admit
liability of this debt.
The applicant contended that this must be
separate from the lien that Sars imposed in terms of section 114
regarding the Mozambique
consignment. I disagree with this submission
for the reasons that follow.
[48]    It
is not in dispute that the amount in respect of the Zimbabwe
consignment has been demanded. This amount
has become due and payable
in terms of section 114 of the Act. The applicant disputes the claim
and avers that it has furnished
the applicant bank statements proving
that the goods have been delivered in Zimbabwe. Sars disputed this
and stated that the bank
statement does not prove whether the goods
were exported or not. Furthermore, Sars argued that the documents the
applicant furnished
concerning this consignment were fraudulent.
[49]
Significantly, section 77G of the Customs and Excise Act defeats
completely the applicant’s case. This
section provides:
“
Notwithstanding
anything to the contrary contained in this Act, the obligation to pay
to the Commissioner and the right of the Commissioner
to receive and
recover any amount demanded in terms of any provision of this Act,
shall not, unless the Commissioner so directs,
be suspended pending
finalisation of any procedure contemplated in this Chapter or pending
a decision by the court.”
[50]    In
my view, this section relates to the 'pay now and argue later' rule.
In
Metcash Trading Ltd v Commissioner for South African Revenue
Services,
2000 (1) SA 1109
(CC) at para 46ff, the Constitutional
Court held that 'the pay now, argue later rule' within the context of
section 36 of the Value
Added Tax Act 89 of 1991 was constitutional
and is not an invasion of the debtor's rights. If it were, the
Constitutional Court
held that the invasion was justifiable under
section 36 of the Constitution.
[51]    In
casu,
even though the applicant disputes the Zimbabwe claim,
the payment of this claim is not suspended by the dispute the
applicant
lodged with Sars. In terms of section 18A(1) of the Act,
the amount became due when the goods left the warehouse to Zimbabwe
if
indeed it was exported. This tax liability also became payable
when the demand was made. The tax liability to Sars could only be

discharged if the applicant could prove that the goods had been
exported. To this end, section 18A(1) of the Act provides that:
“
Notwithstanding
any liability
for duty incurred thereby by
any person in terms of any other provision of this Act, any person
who exports any goods from a customs
and excise warehouse to any
place outside the common customs area shall, subject to the
provisions of subsection (2), be liable
for the duty on all goods
which he or she so exports”.
[52]
The argument presented by the applicant's Counsel is that the
detention of goods and imposition of a lien
applies only to the goods
intended to be covered by the lien. Counsel argued that if a future
liability arises with the same debtor,
as was the case in this
matter, the lien does not cover it. In my view, this argument is
misplaced and unsustainable. This conclusion
is borne out by the fact
that if a tax liability is due by a taxpayer, it is a debt due to the
state. Sars is empowered in terms
of section 114 of the Act to impose
a lien over those goods to secure payment of the debt even in respect
of the second debt.
[53]
In this case, after the lien in respect of the Mozambique shipment
was imposed, another debt owed by the
applicant became due and
payable to Sars. It cannot be expected of Sars to release the goods
in respect of the first debt and still
detain them for the second
debt. We need to remind ourselves that the statutory lien that Sars
has is the right of control to withhold
the goods until
any
indebtedness
in terms of section 114(1)(a) of the Customs and
Excise Act due by the applicant or a debtor is paid in full.
[54]
To this end, I agree with Mr Peter that there is no requirement for a
lien to be exercised over only so much
of the value of the property
as is equal to the indebtedness. Furthermore, nowhere does section
114 provide an amount concerning
the lien. Importantly, it is goods
that are subject to a lien and not the value of the goods. I must
emphasise that the detention
of a customs debtor's goods establishes
the statutory lien that confers preference on the Sars’s claim.
[55]
The debt concerning the Zimbabwe consignment is a debt in terms of
the Customs and Excise Act. The fact that
this indebtedness did not
exists at the time the applicant’s goods were first detained
and the lien was imposed is immaterial.
The Zimbabwe consignment also
gave rise to a debt due to the Sars. Sars cannot be expected to
impose a second lien over the applicant's
goods. The applicant must
pay its debt and challenge Sars for the Zimbabwe debt if it so
wishes. Significantly, the fact that the
applicant disputes the debt
does not erode Sars’s powers to impose a lien over the debtor’s
goods for the exaction
of taxes.
[56]
Accordingly, I share the views expressed in
McKesson Corporation v
Division of Alcoholic Beverages and Tobacco, Department of Business
Regulation of Florida,
496 US 18
(1990), where the United States
Supreme Court stated that 'it is well established that a State need
not provide pre-deprivation
process for the exaction of taxes,
allowing taxpayers to litigate their tax liabilities before payment
might threaten a government's
financial security'. The court noted
further that 'to protect the government's strong interest in
financial stability in this context,
it has long held that the State
may employ various financial sanctions and summary remedies, such as
distress sales, in order to
encourage taxpayers to make timely
payments prior to the resolution of any dispute over the validity of
the tax assessment.'
[57]
In the same way, the sphere in which section 114 of the Customs and
Excise Act is utilized is of great importance.
It is intended to be
used for debt collection in the form of tax in cases where the debtor
has already failed to comply with tax
obligations and has been called
upon but neglected or refused to do so.
[58]
As previously stated, the applicant admitted the debt with respect to
the Mozambique consignment. As a result,
any goods that have been
seized must be held as collateral until the debt is fully settled. If
another debt is discovered against
the same debtor, as was the case
with the Zimbabwe debt, from the broader scheme of the Customs and
Excise Act, Sars would still
be allowed to rely on the lien it has as
a security for the payment of both debts. I repeat, section 114
empowers the Sars to detain
imported or excisable goods, under the
control of the Commissioner which are owned by the person by whom the
debt is due. Where
such detention is effected, the goods are subject
to a lien
until the debt is paid.
[59]
Lastly, it is concerning to note that the applicant could not provide
any reasonable explanation or proof
of the export regarding the
Mozambique consignment. If this shipment was exported, relevant
documents and delivery notes would
have been readily available. While
I appreciate that the applicant wants to trade to remain commercially
viable, I must, however,
stress that the applicant must ensure that
it pays its taxes or proverbially give to Caesar what belongs to
Ceaser.
[60]
Given all these considerations, I am of the view that the applicant
failed to establish a case for the relief
sought in the notice of
motion and that its application must fail.
COSTS
[61]
It is trite that the question of costs is a matter of the court's
discretion. Generally, costs follow the
result, and successful
parties should be awarded their costs. This rule should be departed
from only where good grounds for doing
so exist.
Gamlan
Investments (Pty) Ltd v Trilion Cape (Pty) Ltd
1996 3 SA 692
(C).
One of the fundamental costs principles is to indemnify a successful
litigant for the expense put through in unjustly having
to initiate
or defend litigation. See
Union Government v Gass
1959 4 SA
401
(A) 413.  I am of the view that the respondent must be
indemnified for the costs it incurred to oppose the applicant’s

application.
ORDER
[62]
Consequently, the following order is granted.
62.1
The application is dismissed, and the applicant is ordered to pay the
costs hereof, including the costs of
senior Counsel.
LEKHULENI
JD
JUDGE
OF THE HIGH COURT
APPEARANCES
For
the Applicant:
Adv
Bothma
Instructed
by:
CTC
Stander & Associates
C/o
Pieterse Sellner Erasmus
2
nd
Floor Wembly Square 3
Gardens
– Cape Town
For
the Respondent:
Adv
Peter SC
Instructed
by:
MacRobert
Inc
Cnr
Shoba & Justice Mohamed Street
Brookly
- Pretoria