Customs (and sometimes excise duties and levies) as well as VAT are payable on imported or excisable goods which enter home consumption. However, where the goods were lost due to robbery or circumstances beyond a party’s reasonable control, the duties, levies and VAT could be rebated.
SARS contested this but the Supreme Court of Appeal (“SCA”) ruled that loss through irresistible force in hijacking or robbery qualified for the rebate.
Given the level of crime relating to products like tobacco, alcohol and clothing, one can only imagine how many entities applied to SARS to make use of such a rebate item. This resulted in a huge loss to the fiscus.
SARS has now ‘closed the gap’ to avoid the SCA judgement. In Government Gazette 43051 dated 28 February 2020, SARS officially announced to the world that it will be holding victims of theft and robbery liable for VAT, duty and levy amounts relating to the stolen goods.
Historically, victims of robbery were permitted to make use of Rebate Item 412.09 which exempted them from the payment of the duty and VAT related to the stolen goods if it could be shown that:
- the goods were under customs control e.g. in a customs & excise warehouse; rebate storeroom; in the process of being removed under rebate or deferment of duty, from a place in the Republic to another place; and
- no compensation for customs duty had been received by or was due to the owner of the goods;
- the loss was not due to the negligence or fraud of the person liable for the duty; and
- the goods did not enter home consumption.
In SARS v Encarnacao N.O. (543/2017)  ZASCA 71, the SCA stated armed robbery could amount to vis major resulting in the imported goods qualifying for rebate item 412.09. The court said:
An interpretation that accepts that an armed robbery can fall within the scope of vis major and that goods that are lost as a result of an armed robbery fall within the meaning of Rebate item 412.09 does not subvert the meaning of any of the provisions cited by appellant. In addition, it allows for a situation whereby a rebate can be claimed where goods are lost to both appellant and respondent as a result of an armed robbery.
Clearly SARS is now looking to avoid the relief that the judgement of the SCA allowed to victims of a robbery or hijacking. No doubt these crimes are prolific, and SARS has now amended the legislation to expressly exclude any possible rebate in respect of goods lost due to robbery or theft.
SARS has also amended various 4th Schedule and 6th Schedule rebate items, as well as the Schedule to the Value Added Tax Act to exclude any rebate of duty, fuel levy, road accident fund levy, excise duty, health promotion levy or VAT arising from goods lost due to robbery or theft.