Is it Ignorance or Abuse of Law?

by Vusi Ngcobo

Recently, one of South Africa’s major supermarket chains approached us after being audited by SARS. The audit outcome letter raised a single but significant finding against them.

The client had imported fresh garlic from China and had not paid VAT, as garlic is a zero-rated vegetable. However, SARS alleged that the client had contravened Section 7(1)(b) read with Section 13(6) of the VAT Act 89 of 1991, and intended to raise VAT amounting to R3 million. This would likely have been accompanied by a 10% penalty and interest, as prescribed under the PFMA.

What made this case particularly concerning was SARS’s reliance on an internal policy document — one that is not publicly accessible.

This internal document did not include tariff code 0703.20.00, which covers fresh garlic as a zero-rated vegetable. Instead, it only listed various types of beans.

Upon reviewing the official schedule of zero-rated goods, we confirmed that garlic was not excluded, and all vegetables were clearly zero-rated.

When we intervened, we asked a simple but critical question:

“Where in the public domain is this information published?”

If SARS could not provide a publicly available source, then they had no legal basis to impose VAT, penalties, or interest.

Shortly after, SARS withdrew their finding, and we successfully saved our client R2.3 million.

This case raises an important question — what would have happened if this client didn’t have expert representation?

At Mageja Customs Consulting, we’re humbled and proud to have achieved this outcome. Our commitment is to protect our clients’ interests and ensure that the law is applied fairly and transparently.

If you’re facing any customs-related challenges, big or small, don’t hesitate to contact us. We’re here to help you navigate SARS with confidence and clarity.