A customs and duty-free shops operator that was slapped with a R36-million bill by the South African Revenue Service (Sars) following a probe into its
operations, has failed in its high court bid to reverse the tax authority’s decision.
In 2018 Sars conducted an extensive investigation and audit into what it alleged to be wrongdoing by duty-free shops company Nu Africa Duty Free with reference to the special storage warehouses and operating store warehouses.
Nu Africa Duty Free Shops describes itself on its website as “a wholly black-owned South African registered private company” that sells goods and provides services to diplomats, marine traders and the export markets. It is the licensee of various customs and excise warehouses in South Africa.
At the end of an extensive probe by Sars, it was found that the company had, without the written permission from Sars, diverted goods entered for delivery at customs and excise warehouse to a destination other than those declared by the company.
The receiver of revenue sent a R36-million bill to the company.
But Nu Africa denied liability for the debt and instituted an internal appeal against the demand. Unsatisfied with the outcome of the internal appeal, Nu Africa hauled Sars to the North Gauteng High.
According to court papers, in August 2018, Nu Africa requested Sars to suspend the payment of the debt and when this failed, the company then launched court action against Sars.
The Pretoria-based company stated that it was preparing applications for the licensing of two special storage warehouses and approached officials from Sars for advice on completing a DA 185 application form.
Nu Africa contented that on October 23 and 29, 2019 Sars vetted two applications it had made for special storage warehouses. However, two months later, the company cited that the tax man turned down the warehouse licensing applications. But the company’s case against Sars was dismissed with costs by Judge Colleen Collis.
In her judgment, Collis said Sars had argued the reason for the refusal of the warehouse licensing was because Nu Africa “had previously contravened the Customs Act”.
“On the basis that the applicant had falsely completed the forms as if there was no contravention at all by the applicant, resulted in the applications being refused. According to Sars, this was misleading.”
The judge said Sars had raised a debt against Nu Africa of about R36-million on August 3, 2018, “and yet the applicant had failed to disclose this in its forms”.
“The applicant’s reasons for its failure to disclose previous wrongdoing with reference to the Customs Act was said to be that the applicant does not accept the findings arrived at by the commissioner [of Sars] and has challenged the commissioner’s findings,” Collis said.
“Based on the facts before the committee the conclusion is that the Customs & Excise Trader Registration’s decision is confirmed, due to non-compliance, contravention of the act, as well as the outstanding schedule. It is on this basis that it was therefore submitted that the commissioner acted rationally and that it had a sound basis in law upon which to refuse the applications. This position, this court is also in agreement with.
“The applicant contravened the provisions of the act and on that basis alone the commissioner was fully justified to refuse its applications for the licences. In the result the application is dismissed with costs, including the costs of two counsels.”
