Johannesburg — IN A landmark judgment, the Supreme Court of Appeal ruled this month that the South African Revenue Service (SARS) was entitled to seize goods belonging to a small business in the absence of any import documents or documentary proof of where they were purchased.

The appeal court held that the owner of the business was under a duty to keep proper books of account and documents to reflect where the goods were purchased from . These provisions were introduced into the Customs and Excise Act of 1964 for the purpose of facilitating the policing of the importation of goods into the country.

The court held that the owner's inability to produce any such documents was a reasonable ground for SARS to conclude that the goods were liable to forfeiture. SARS was entitled to seize them.

In the case in question, the owner and manager of a small clothing retailer, Payless Fashions, conducted business from a shop in Brakpan, Gauteng.

During September and October last year, officers in the employ of SARS seized clothes to the value of R1,2m from the premises on the basis that they were imported goods for which no import duty had been paid.

The owner applied to the Pretoria High Court for an order declaring the seizure unlawful and a further order that the goods seized be returned by a certain date.

The owner claimed that the goods were purchased from retailers or wholesalers in Chinatown (an area in Johannesburg with many Chinese traders) and Fordsburg.

He offered to take SARS officers to his suppliers, but they declined. The receiver said all purchases were paid in cash.

The owner produced two or three invoices, which were found by the officers to be unacceptable as they contained no description of the goods, nor did they reflect who the buyer was.

The Pretoria High Court decided that the SARS officers should have gone to Chinatown and Fordsburg to establish the truth of the owner's contentions. SARS appealed against the ruling.

In considering whether SARS had reasonable grounds for seizing the goods, the appeal court said there were a number of factors that were material.

These included the fact that the goods were marked as being made in China and bore Chinese inscriptions; the inability of the owner to produce any documents recording where and from whom they were purchased; and the owner giving the officers false value-added tax and tax numbers.

The appeal court held that there was no obligation on the SARS officers to accompany the business owner to his suppliers.