Bechan vs SARS: CASE SUMMARY

Case Information

• Court: The Supreme Court of Appeal of South Africa
• Case No: 1196/2022
• Applicant: Kapeel Bechan and Bechan Consulting (Pty) Ltd
• Defendant: SARS Customs Investigations Unit, SARS Tactical Investigations Unit, SARS Illicit Economy Unit, and Minister of Police
• Judgment Date: 5 March 2024
• Download the FULL JUDGMENT

Judgment Summary

The case of Bechan and Another v SARS Customs Investigations Unit and Others was heard by the Supreme Court of Appeal (SCA) of South Africa, where Mr. Kapeel Bechan, alongside his company, Bechan Consulting (Pty) Ltd, sought to reclaim property seized by SARS officials during a search warrant operation targeting Bullion Star (Pty) Ltd. The appellants claimed that SARS acted unlawfully by confiscating items from Mr. Bechan’s vehicle, which was parked on premises under surveillance for suspected tax non-compliance by Bullion Star. SARS’s investigation, which stemmed from alleged tax offences by Bullion Star, was conducted under a warrant issued under sections 59 and 60 of the Tax Administration Act (TAA).

SARS officials arrived at the targeted premises on 29 March 2022, suspecting items related to Bullion Star’s tax affairs were being removed from the site and stored in nearby vehicles, including Mr. Bechan’s Toyota Fortuner. Upon inspection, officials found electronic devices, financial records, and other materials they believed could be relevant to Bullion Star’s investigation. The appellants argued that SARS overstepped its authority by extending the warrant to cover third-party property not explicitly connected to Bullion Star. Seeking a spoliation remedy, they requested the court to compel SARS to return the seized property.

The high court dismissed the application, ruling that SARS’s interpretation of the warrant was valid and aligned with the TAA’s provisions, which permit broad search and seizure across any premises and items suspected of containing relevant material. The appellants then appealed, contending that SARS’s search and seizure violated the TAA’s intent, which they argued should apply strictly to the targeted taxpayer. However, the SCA upheld the high court’s decision, confirming that SARS’s warrant execution was valid and that the broad interpretation was in line with tax compliance enforcement under South African law. The court further noted that SARS’s actions required only a suspicion of relevance under section 61(3)(a) of the TAA, allowing search and seizure on the basis of suspected association with the taxpayer.

The court acknowledged a subsequent ruling that set aside the warrant but maintained that this development did not impact the appeal. The appeal was dismissed, reinforcing SARS’s power to act broadly on suspicion when enforcing tax laws, especially where assets relevant to compliance may be concealed by third parties. The ruling highlights the need for clear tax risk management by third parties who may unwittingly become involved in tax investigations due to shared premises or associations with investigated entities.

VIEW THE FULL CASE SUMMARY (WEB)