A number of legal questions were raised during Fastjet Holdings v the Commissioner SARS, (case number 64901/2013), in which the High Court delivered judgement on 25 June 2015.Of these, two issues stand out for business owners:
If you make a ‘factual statement’, ensure the evidence supports your assertion in a practical manner, as this can make or break a case.
If you allege in an affidavit that certain actions will take place, give good reasons for your views. In the case cited, the applicant (Fastjet Holdings) imported two million cigarettes from Zimbabwe in 2012. After the customs and excise duties were paid, the cigarettes were ‘seized and detained’. There were two problems. The first had to do with the packaging. The second was the fact that a new law prohibiting sales of non-reduced ignition propensity (RIP) cigarettes was due to come into effect a few days later, on 16 November 2012.
The seizure meant that the cigarettes could not be sold before the RIP rule came into effect, rendering the consignment effectively unsaleable. This, maintained the applicant, made SARS and the customs authorities liable to provide the company with a refund in terms of Section 76(2) (d) of the Customs and Excise Act (CEA).
For a successful application under Section 76(2)(d), the goods must be damaged or irrevocably lost for reasons beyond the applicant’s control, prior to the release of the goods. This is where the applicant hit a snag. The goods were confiscated partly because they did not comply with the RIP rules, and the Court held that to claim that the non-release of goods due to the coming into operation of new legislation could not fit within the ambit of the CEA provision cited by the applicant.
Also, matters were indeed within the applicant’s control, as the company could have complied with the rules relating to cigarette packaging. In the judge’s opinion, it had not done so. The application also had to fail because the applicant contended that the goods would have all been sold by the time the RIP rules came into effect. For this to be so, the company would have had to sell the two million cigarettes in a very short space of time.
Had the applicant provided cogent, plausible argument in support of its contention, the outcome might have been different. The lessons for farmers, business owners and tax consultants are, firstly, not to let the argument stray too far from the facts. And, secondly, if an allegation has to be made in an application, appeal or objection, provide every plausible argument in support of the allegation.
In other words, never leave an important allegation out in the cold, all by itself. Dress it up warmly and support it as far as possible, because if it’s undermined, the case is lost!