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SARS gets bloody nose with tobacco CCTV camera interdict

SARS gets bloody nose with tobacco CCTV camera interdict
SARS loses an estimated R8-billion annually due to the illicit trade of tobacco. (Photo: / Wikipedia)

The Gauteng High Court has ruled against the installation by the SA Revenue Service of video cameras to monitor tobacco warehouses.

The Gauteng High Court has bloodied the SA Revenue Service’s nose for too hastily implementing regulations to install CCTV cameras in tobacco customs warehouses.

In December 2023 the Gauteng High Court handed SARS a significant victory in its ongoing attempts to plug fiscal gaps due to the illicit tobacco trade by installing cameras in warehouses to fulfil new licensing requirements. 

The new licence conditions compel registered licensees who operate premises for the manufacture and storage of tobacco products to allow SARS to continually monitor activities and bonded goods in certain areas with CCTV equipment. 

SARS and the fiscus lose an estimated R8-billion annually due to the illicit trade of tobacco.

In that instance, Judge Jacques Minnaar found that SARS had every right to implement “Rule 19.09” promulgated under the Customs and Excise Act regardless of the outcome of a judicial review application launched in 2022.

This week, on 15 May, in the same court, Judge Linda Retief granted interim relief in the matter brought by the Fair-Trade Independent Tobacco Association (Fita) alongside six of its members to halt the implementation of Rule 19-09.

In its main application, Fita contended that the introduction of the rule was unconstitutional and stood to be set aside, alternatively declared unconstitutional. 

The second application was launched by Bozza Tobacco (Pty) Ltd together with five other independent licensees in terms of the Customs Act [collectively, Bozza applicants]. 

The Bozza applicants sought to intervene in the main application and also wanted the court to offer interim relief from the implementation of the CCTV rule.

Broader package

SARS argued that the rule was introduced as part of “a broader package of initiatives to address illicit trade of tobacco products, which in turn results in rampant tax evasion in the tobacco industry, and to foster tax compliance”.

In February 2023, SARS commenced with two installations at British American Tobacco South Africa and Gold Leaf, two of the largest tobacco product manufacturers in South Africa. 

The regulation also made provision for “transitional arrangements in respect of licence holders on the effective date of the rules”. 

Retief said it was “significant to appreciate” that none of the comparable countries referred to by SARS in the document justifying the implementation of the impugned rule “are countries founded on democratic values, nor do they appreciate the supremacy of the Constitution like South Africa”. 

The question that arose with the granting of interim relief, Retief added, was whether the tobacco companies “substantively possess a prima facie right which requires interim protection against the discharge and/or implementation of the impugned decision”.

She added that SARS’ contention that the CCTV cameras would only be monitoring the pre-identified areas of a licenced tobacco product warehouse on implementation “is factually not correct having regard to the notice of implementation”. 

Furthermore, no guidelines existed for SARS in the implementation stage of the rule.

The court sought to “exercise its discretion by striking or finding a balance when considering what is in the interest of justice”, said Retief.

Read more in Daily Maverick: As 2024 Budget shows, SA’s legal cigarette market continues to haemorrhage

Factors considered were that SARS was requested to provide an undertaking that it was aware of the main application, that the applicants complied with section 96 by first requesting a reduction of time before the institution of legal proceedings. 

The fact that the Fita applicants, as far back as 27 July 2022 – “a time before the promulgation of the impugned rule” – had indicated that they would challenge the rule if promulgated, spoke to “the foreseeability of legal action and the success with the interim relief too is a factor to be weighed”.

Retief ruled that the Fita applicants’ non-compliance with the periods provided for in terms of section 96 of the Customs and Excise Act 91 of 1964 be condoned.

Furthermore, pending the final determination of the application, SARS was restrained from implementing the rule. 

SARS was also ordered to pay costs. DM


Comments - Please in order to comment.

  • Steve Davidson says:

    But surely the plaintiffs proved their likely criminality by objecting to the cameras in the first place? Weird decision IMHO.

    • Miss Jellybean says:

      It is not that they have something to hide it is more about the fact that lately SARS are acting more & more like mob bosses. Who decides which areas to monitor? Who monitors the cameras & can they be trusted not to arrange for hijacking of delivery vehicles with insider knowledge? Who is expected to pay for the electricity used by these cameras?

    • Gbone . says:

      The Post Office workers won a similar case when they weren’t allowed to install CCTV cameras is the sorting office to catch the workers were stealing the post, invasion of privacy!

      • Alley Cat says:

        I remember that Carte Blanch episode where they showed the post office staff caught on CCTV helping themselves to the contents of packages. NO CONSEQUENCES!
        Where are the rights of us law abiding citizens to have our property safeguarded? Stinks!

  • Anil Maharaj says:

    I like the decision of the court. SARS was becoming increasingly arrogant under their present commissioner and needed to be taken down a peg or two.
    Also, from a judicial point of view, I think that the decision was fair.

  • Con Tester says:

    On a libertarian conception of taxation as legalised theft, the court reached the correct decision. As pointed out by others, SARS has over recent times become increasingly bolshy about invading private spaces, supposedly in the interests of curbing tax avoidance and evasion. No doubt, this behaviour is driven primarily by the realisation that the fiscal books don’t balance between state income and state expenditure. Moreover, the state has the power to legitimise almost any intrusions by way of suitable legislation.

    You don’t have to think too hard to see whose hands hold the weightier end of the equation here, and so this judgement is a welcome handbrake on SARS’ increasingly unbridled appetite for power and control.

  • John Smythe says:

    SARS has become a big brother that steps over the line with excessive measures. “They’re coming for you”.
    They try to make criminals of us all while being afraid to tackle the big monsters of the industry (the smugglers – both clandestine and openly brazen and even self-confessed). I’m not a smoker. But well done to FITA!

  • Geoff Coles says:

    A knobbled Judge perhaps, what was she smoking?

  • Jean Racine says:

    I wonder, all the people congratulating the cigarette manufacturers, will they be as magnanimous when the next Mazzone donation hits the EFF account?
    Or when Edward Zuma flaunts whatever he bought with his dividends?

    • Con Tester says:

      Not big on principles, are we?

      • Jean Racine says:

        How does my choosing to highlight hypocrisy, lead you to that conclusion?

        • Con Tester says:

          What hypocrisy, please? Think about it: Condemnation of (1) illicit tobacco trade, (2) the misspending of its proceeds, and (3) SARS’ intrusive authoritarian megalomania are not mutually exclusive or even contradictory positions to be holding.

          But if you think they are, I would recommend a course in basic philosophy with a particular focus on informal logical fallacies.

          As for the principle in contention here, “Those who would give up essential liberty to purchase a little temporary safety, deserve neither liberty nor safety.” ― Benjamin Franklin

  • Michael Evans says:

    It’s an appalling judgment. Constitutional rights can be limited in terms of section 36 of the Constitution. The right to privacy can be limited by the huge advantage of the camera system in cracking down on the illicit trade which now makes up approximately 70% of the tobacco trade and deprives SARS of R27billion rand per year or R74million per day. FITA, which brought the application, allegedly represents most of the illicit traders. The legal traders in the tobacco sector all support the SARS camera initiative. Hopefully this crazy judgment will be appealed.

    • Alley Cat says:

      Absolutely agree Michael! I for one would celebrate if SARS were able to collect an extra R8bn and JUJU / Zuma clan and their supporters would have to tighten their rather large belts! Just sad that most of it would not go to the poor.

    • Alan Watkins says:

      Not in this report, the judge was quoted as having said that there was absolutely no proof that the tobacco companies were breaking the law. And yet many parties have said, I wouldnt know this personally not smoking any type of cigarette, that the selling price of these cheap cigarettes is proof of criminality in and of itself as the selling price is less than the excise tax.

    • William Kelly says:

      It has nothing to do with the tobacco industry. It has everything to do with precedent. Why stop at tobacco? Install cameras in your bedroom for SARS to tax you having sex with your wife. This is where this extends. Whilst I agree that SARS cocked it up, and the NPA are useless this does not excuse taking the lazy and invasive of freedoms explicitly guaranteed under the constitution on the basis of convenience for SARS. They have unfettered powers as it is, more than sufficient to get the job done if they were bothered to put in the work. Sacrificing our freedoms from government infringement is not, ever, acceptable.

  • Mordechai Yitzchak says:

    The actions of the defendants have effectively served to prove their guilt. The only people who object to you searching them are those with something to hide. Having effectively “got its man”, the criminals knowing the heat is on, now law enforcement needs to find better ways to apprehend. Simple …

    • The real Ellon Must says:

      In that scenario you then won’t mind if some officious petty bureaucrat demands access to your bank accounts Mordechai? Or any government official will be entitled to wander into your home, just to check that you are not being naughty. And of course, there should be a whole government department focusing on tracking our internet usage to ensure that we are not dissidents and anti ANC (Them being the government)

      • William Kelly says:

        Spot on. The fallacy of the binary argument, that those who have nothing to hide should not object. It is the last refuge of the scoundrel frankly and a key step towards state control over citizenry which is a centuries old struggle.

  • Malcolm Mitchell says:

    To put it kindly, SARS is becoming over enthusiastic – maybe to find the money for the corrupt activities of the ANC acolytes?

  • Mike Newton says:

    Sarafina Zuma banned legal cigarettes during Covid. Could there possibly be a connection?

  • Hidden Name says:

    Good. Increased government oversite over anything, no matter what good reason your present is only an opening for authoritarianism to take root. And that doesn’t end well for anyone.
    SARS was out of line for even attempting this.

  • Francis Mnyele says:

    What have those companies to lose when cameras are installed?

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