As many have experienced, the powers afforded to SARS officials in terms of the Customs & Excise Act 91 of 1964 (“CEA”) are downright scary.  Imagine you find yourself in the following situation:

It is a dark and stormy afternoon. Hoping to avoid the worst of the storm, the Clearing Agent and his staff are getting ready to go home. Next thing, there is a loud banging on the door.  Wondering who would be dropping by in the midst of a storm, the Clearing Agent rushes over to answer the door.  As he opens the door, he sees five men all dressed in black, one of whom has a gun.  The larger of the men introduces them all as SARS officials and states that they are there to carry out a search-and-seizure operation.

The Clearing Agent asks the SARS officials to produce a warrant to enter.  The SARS officials respond saying that in terms of section 4(4)(a) of the CEA, since the premises is licensed or registered with SARS and since the premises is occupied by and used by someone licensed or registered with SARS, a warrant is not necessary.  

Anyone in that situation would immediately phone his or her attorney, who would advise that the SARS officials must be given access to the premises, since in terms of section 4 of the CEA, if after declaring his official capacity, a SARS official is barred from entering the licensed or registered premises, he may “break open any door or window or break through any wall on the premises for the purpose of entry and search.”  Once inside, the SARS official has the power to question any person he finds on the premises and to break up any ground or flooring if he reasonably believes doing so is necessary.  As long as the SARS official can show that the property damage caused was caused through his bona fide actions, the person who suffered the loss or damage may not claim compensation.

In Gaertner and Others v Minister of Finance and Others (CCT 56/13) [2013] ZACC 38; 2014 (1) SA 442 (CC); 2014 (1) BCLR 38 (CC); 76 SATC 69 (14 November 2013) (“Gaertner”), SARS did not confine its search to the business premises.  It also conducted a thorough, warrantless search of Mr Gaertner’s home.

Mr Gaertner was understandably incensed by SARS’ actions and approached the courts for a ruling that section 4 of the CEA was unconstitutional.   The Constitutional Court agreed in part, which resulted in an amendment to the provisions of section 4, whereby SARS may not search a private residence unless in possession of a warrant.  

In Alliance Fuel (Pty) Ltd v Commissioner for the South African Revenue Service and Another (7453/2024) [2024] ZALMPPHC 90 (25 July 2024) (“Alliance”), the court stated that SARS is legally obliged to furnish a copy of the ex parte application and the supporting affidavits which were used to obtain the warrant.

In addition to the power to conduct warrantless searches of business premises, SARS officials may also stop and board any vehicle in the Republic and search the vehicle and any person in the vehicle.  Officials also have the right to secure any warehouse, storeroom, vehicle, etc., if the official believes that a contravention under the CEA has been or is likely to be committed.

As can be seen above, the powers of SARS are wide and far-reaching, but the exercise of any power by a SARS official must be reasonable and proper procedure must be followed.  The SARS official must be acting in the course and scope of his employment when entering a licensed or registered premises and must have the genuine belief that the licensee or registrant has committed an offence in terms of the CEA.

In Alliance, at paragraph 16.5,  the High Court stated that “…as an organ of state, the Respondent has a higher duty to respect the law, fulfil procedural requirements and tread carefully when dealing with rights….”

In Gaertner, the Court stated that:

“[67]  There must be a rational connection between the purpose of the law and the limitation imposed by it. In broad terms, that rational connection does exist between the limitation at issue here and the provision’s purpose. The tight regulation of the customs and excise industry is enforced through inspections. Intrinsically, inspections of this kind are still intrusive, although they must be somewhat tolerable in respect of business premises. But this is something that participants in the industry must be content with if compliance with the Customs and Excise Act is to be achieved.”

Any entity that holds a license or registration issued in terms of the CEA could find itself on the receiving end of a warrantless SARS raid.  Being subjected to a SARS raid is traumatic and panic-inducing.  It is very important that a clear head be maintained, and it is advised that the licensee or registrant:

- Promptly contact its legal representative and request their immediate presence to ensure that the licensee or registrant’s rights are protected; and

- Establish the purpose of the raid, and record who the SARS officials conducting the raid are, and what documents and/or equipment the officials remove from the premises.