Cat and mouse — Gold export dealer suspected of tax offences loses search and seizure court appeal 

The matter pertains to a raid on precious metals dealer, Bullion Star, in March 2022, after SARS obtained a warrant from the high court in terms of section 59 of the Tax Administration Act (TAA) 28 of 2011.

They did so on the basis that “there was reason to believe that Bullion Star, had, amongst others, committed various tax offences”. The company had facilities capable of transforming precious metals and minerals into a “higher-value” product to be sold locally or abroad.

On Tuesday, Supreme Court Of Appeal Deputy President Xola Petse and judges Thobeka Mbatha, Keoagile Matojane and acting judges Fayeeza Kathree-Setiloane and Raylene Keightley found in favour of SARS.

The court dismissed with costs an appeal in the matter between Kapeel Bechan, and Bechan Consulting (PTY) LTD (trading as Bullion Star) and SARS Customs, Tactical and Illicit Economy Units as well as the Minster of Police and the Directorate for Priority Crime Investigation (DPCI)

Bechan had sought the return of items seized during a surprise raid on the company’s premises in Rivonia on 29 March 2022, including 10 laptops, four cellphones, and various financial documents related to Bullion Star, including purchase files and bank statements. He claimed this had been done unlawfully.

Disposing of evidence in plain sight

The court learned that SARS officials had arrived at the premises around 11am, on 29 March, a Tuesday to search for material relevant to Bullion Star and its tax liability.

The company had blipped on SARS’ radar when it submitted a VAT return claim in 2022 for R13.9-million. Prior to this Bullion Star had rarely exported goods but SARS found that in February 2022 it had exported unwrought gold in excess of R126-million”.

This had prompted the audit and the raid.

The court heard that whilst SARS officials waited at a locked gate in order to gain access to the premises, they observed people removing items from the building and placing them in vehicles.

When the officials were allowed in about half an hour later, they noticed files, notebooks as well as electronic equipment in a Fortuner which belonged to Bechan. When requested to unlock the vehicle Bechan had claimed to have lost the keys.

“SARS officials obtained the services of a locksmith to unlock the Fortuner (and other vehicles on the premises). On opening it, they invited Mr Bechan to participate in and be present during, the search”.

Bechan, while at first denying any knowledge of the laptops and cellular phones, later filed a notice of motion for the return of two of each of the devices. SARS had been more than willing to return these, the court heard, on production of proof of ownership, which had not been forthcoming. This application was dismissed.

The company later argued in an April 2022 application to the high court that the items, because they were found stored in the Fortuner, fell outside the scope of what could be regarded as the “premises” of the company.

The high court held that SARS was entitled to search for and seize items relevant to Bullion Star as the warrant specifically authorised its officials to search anywhere on the premises.

Parking problems

While Bechan had at first in a replying affidavit admitted that the Fortuner was parked on the premises, he later, in heads of argument contended otherwise the SCA noted. That excuse was soon dispensed with.

Significantly, the TAA did not afford a SARS official carte blanche in searching the property of third parties who may be on the premises identified in the warrant, the court noted.

A SARS official may only do so if they suspect that the property of a third party contains material relevant to the taxpayer.

Delivering the ruling, judge Kathree-Setiloane found significantly “as I see it, search and seizure operations on the premises identified in a warrant would be rendered ineffectual if SARS officials were powerless, under the TAA, to search third parties for relevant material”.

“This would be especially so, in a case such as this, where material relevant to the taxpayer was spirited away and placed in a vehicle belonging to a third party, with impunity.”

In the context of the facts of this case, the court found, SARS had “a statutory right to dispossess the appellants of the property found in the Fortuner. They were, therefore, not entitled to the relief sought in the spoliation application. For these reasons, the appeal must fail”.

Judge Kathree-Setiloane noted that “for the sake of completeness” it was necessary to record that as preparation for the delivery of this specific judgement was being made, Bechan’s attorneys informed the court that “on 2 February 2024 the high court set aside the search and seizure warrant”.

“This was consequent on a separate application instituted by Bullion Star. The Court was further advised by SARS’ attorneys that it was considering an appeal against that order”.

She said it was a “well-established general principle that this Court decides whether the judgment appealed from is right or wrong according to the facts in existence at the time it was given and not according to new circumstances that came into existence afterwards. It follows that the subsequent setting aside of the warrant by the high court is irrelevant to this appeal”. DM