Categories: Tax Advice

Warrantless searches – what you need to know

A recent court case has helped to define how far Sars officials are allowed to go when it comes to…

In a recently concluded case heard in the Western Cape High Court (number 12632/12) the facts were as follows:

  • A Cape Town businessman owned a company that imported frozen foods and other goods into South Africa.
  • His company owned bonded warehouses where these goods were stored. If such goods are to enter South Africa, customs duties and VAT have to be paid. Goods sent on to offshore destinations don’t need payment of duties.
  • Sars officials suspected that invoices for goods bought from a Canadian company were in excess of the documents presented to customs and upon which duties were paid.
  • The officials made use of their powers under Section 4(4) of the Customs and Excise Act to search the company’s premises and the home of the businessman. According to the papers filed in the case, the way in which the search was conducted was very high-handed.

READ:Objecting? Line up the evidence first!

During the search of the business premises, officials controlled the comings and goings of visitors, as well as staff. The search lasted five hours. Numerous copies of documents were made and staff were not allowed to use the computers.

Rights to privacy infringed
At the businessman’s home, Sars officials even searched his children’s bedrooms and analysed the contents of their PCs. The judge later said the searches could be described as “rampant triumphalism”. In the High Court proceedings instituted as a result of the searches, the businessman contended that the provisions of the Customs and Excise Act that allowed ‘warrantless searches’ infringed the right to privacy enshrined in the Bill of Rights (Section 14 of the Constitution).

Privacy not guaranteed
The judge referred to the case of Magajane v Chairperson, North West Gambling Board 2006 (5) SA 25 250 (CC), where it was held that:  “The right to privacy extends beyond the inner sanctum of the home. However, the legitimate expectation of privacy weakens as one moves away from this inviolable core. In particular, businesses have a lower expectation of privacy in regard to the disclosure of information; and the more regulated a business is, the more attenuated is its right to privacy.”

The judge said that at the very least, a warrantless search of a person’s home would not pass constitutional muster, but routine searches of persons registered to operate bonded warehouses and other such controlled environments were justifiable. This is because warrantless routine searches of registered and licensed persons do not constitute a significant inroad into their privacy because their reasonable expectation of privacy in such searches is low. But the warrantless non-routine search of a non-licensed facility was held by the court to be unjustifiable.

Peter O’Halloran is head of tax at BDO, Gaborone. Contact him on 00267 390 2779 or at farmersweekly@caxton.co.za. Please state ‘Tax’ in the subject line of your email.

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