Agent wins liability battle against SARS

'Not responsible for under-declaration by its principal' Alan Peat IN A case where a clearing and forwarding (c&f) agent was being held liable by SA Revenue Services (SARS) for his principal's duty and tax on imports, the judge has found in favour of the agent. The defence, according to Pre Prinsloo, a specialist international transport and trade attorney at Shepstone & Wylie, was primarily based on a previous court interpretation of section 99(2)(a) of the Customs & Excise Act. The original issue arose in 1997, when SARS would not accept the invoice value on the bills of entry for various consignments of goods as the transaction value on which duty and VAT was to be paid. They consequently detained the goods, and only released them when the c&f agent made provisional payments under the prescribed DA70 forms. "A few years down the line," Prinsloo told FTW, ÒSARS sought to hold the agent liable for the obligations of its principal - as they are entitled to do in terms of the Act. "They demanded that the agent defray the outstanding duty, VAT, penalties and forfeiture raised as a result of the under-declaration of the value of the goods." The defence was found in section 99(2)(a) of the Act, he added, which prescribes circumstances in which an agent would be liable for the obligations of his principal. "You might recall that the Supreme Court of Appeal recently considered the section in the case of the Commissioner for Customs & Excise:v:Container Logistics," Prinsloo said. In this, the court held that an agent's only obligation was to make an entry and to deliver a bill of entry to the commissioner. At the same time, to complete this documentation, the agent had to rely on the honesty and integrity of the person supplying the information Ð for example, the transaction or market value of the consignment. "If there are no other steps that could reasonably be expected of an agent in preventing a non-fulfilment of the importer's obligation," said Prinsloo, "then the agent cannot be held liable for his principal's obligations." And that was the decision of the court in this latest case. It found that the agent could not be held liable by SARS for the under-declaration of the value of the goods by its principal Ð nor the duty, VAT, penalties and forfeiture.