In March 2024, the Supreme Court of Appeal held that SARS lawfully seized a director’s property during a search and seizure operation conducted at the premises of the company.

SARS had obtained a warrant from the high court in terms of the Tax Administration Act authorising it to enter and search the company’s premises and seize any foreseeably relevant material, on the basis that there were reasons to believe that the company committed various tax offences.

When SARS officials executed the warrant, they were made to wait at the gate of the premises for roughly 25 minutes.  During that time, the SARS officials noticed people removing items from the building and placing them in vehicles.  Upon entering the premises, they came across a vehicle belonging to the director which appeared to contain files, notebooks and electronic equipment.  The director told the SARS officials that he could not find his car keys and a locksmith had to be called in to unlock the vehicle.  The SARS officials seized 10 laptops, four cell phones and various financial documents pertaining to the company.

The court was required to determine whether the warrant authorised SARS to search and seize the property of parties other than the taxpayer who happened to be on the premises when the warrant is executed.  The court explained that the warrant is location specific and not taxpayer specific. The premises identified in the warrant need not be the premises of the taxpayer.  Accordingly, the ambit of a search and seizure operation by SARS is not limited to the business of the taxpayer and SARS may search third parties present anywhere on the premises and seize any relevant material in their possession, if SARS suspects that the property in the  possession of the third party contains material relevant to the taxpayer.

In this matter, SARS acted lawfully because there were reasonable grounds to suspect that the items in the director’s vehicle were relevant to the alleged tax offences committed by the company.  The court remarked that if SARS was restricted from searching and seizing the property of third parties on the premises, the warrant would be rendered ineffective, especially in a matter such as this one where the SARS officials saw people removing items from the building and placing them in a vehicle.  Nothing more than a reasonable suspicion that the material is relevant to the taxpayer is required.

The case is Bechan and Another v SARS Customs Investigations Unit and Others (1196/2022) [2024] ZASCA 20 (5 March 2024).  

This blog was co-authored by Felix Le Roux, Trainee Associate.