Ground-breaking decision narrows Customs' authority

Section 114 declared unconstitutional Alan Peat A PART of the Customs & Excise Act Ð which allowed the authorities rather too free a hand in detaining and/or selling a person's goods Ð has been declared constitutionally invalid. This was decided in the recent case of First National Bank of SA Limited t/a West Bank v The Commissioner for SA Revenue Services (SARS) and others. "It's a ground-breaking court decision in terms of procedural fairness," said Quintus van der Merwe of Shepstone & Wylie's international transport and trade department, "and amplifies the importance of the Constitution." The part of the act under challenge by the bank was section 114 of the Customs and Excise Act. The judge's finding was that it was constitutionally invalid. This because it provided customs with the right to the lien, detention or sale of goods owned by someone - other than persons owing certain named debts to the state. "Under this court decision if you are not a debtor to the state in terms of this section, your goods may not be liened, detained or sold by SARS." said Van der Merwe, " The judge in the case also stated that the procedural provisions of section 114 were probably inconsistent with the constitution since it allowed the commissioner to take possession of and sell goods without having to go to court. This is legally not on, according to Van der Merwe. "Under common law it is impossible for anyone to start selling the belongings of a debtor without following due court process," he said. The court case resulted in the judge ordering the section to be amended. This to provide that the commissioner may file a statement certified by him with the clerk or the registrar of any competent court stating what duty is due to SARS. "Such statement, and any proceedings commenced thereon, would then constitute a valid "civil judgement" of that court," Van der Merwe told FTW. However, what was missing in the court's findings, was that the judge did not order that due notice be given to the debtor. "This due notice would have allowed him the opportunity to respond to SARS' claims before a judgement is simply entered against him by SARS." This, he added, would comply with the courts' current leaning towards procedural fairness in administrative actions. "The Promotion of Administrative Justice Act makes it clear that there must be a culture of accountability, openness and transparency in public administration and an exercise of public power," Van der Merwe told FTW. "This includes giving any person affected: l adequate notice of the nature and purpose of the administrative action; l a reasonable opportunity to make representations; l a clear statement of the administrative action; l adequate notice of any right of review or internal appeal; l and adequate notice of the right to request reasons for such action."