Authored by Felix Le Roux.
On 3 July 2026, the Supreme Court of Appeal upheld a clearing agent’s challenge against decisions made by the Commissioner for SARS to impose customs-related duties and penalties. The court affirmed that administrative decision-makers, like the Commissioner in this case, act irrationally if they fail to consider relevant material placed before them by the affected party, even if the outcome of doing so is speculative. The Commissioner fell short on a distinct issue because there was no disclosed basis showing how the discretion to impose a forfeiture-related penalty was exercised.
The clearing agent had processed customs documentation for 67 consignments of fuel moved from Mozambique to Zimbabwe and Botswana. The Commissioner audited certain goods transported from Mozambique to Zimbabwe through South Africa and requested clearance documents from the clearing agent. The clearing agent responded with detailed submissions and provided the documents it had, which ran to four lever-arch files. The Commissioner issued a letter of demand to the clearing agent for over R35 million in duties and penalties, including an amount in lieu of forfeiture of the goods, on the basis that the clearing agent had failed to prove that the goods were duly exported out of South Africa.
The clearing agent challenged those decisions in judicial review proceedings. The record of the decisions showed that the reasons advanced by the Commissioner in the letter of demand were nothing more than a repetition of the bare assertions made in the initial notice issued to the clearing agent. There was no indication that the Commissioner engaged with the documentation provided by the clearing agent. The Commissioner should have evaluated the documents, identified any deficiencies in them, and explained why the clearing agent had failed to prove due export. Having not done so, the decisions were procedurally irrational because they lacked a rational connection with the material that was placed before the Commissioner. It was impermissible for the Commissioner to attempt to cure those defects through other reasons which were formulated after the fact during the litigation.
The court ruled further that the decision to impose an amount in lieu of forfeiture involved the exercise of a separate discretion which required independent consideration by the Commissioner. There was no indication that the Commissioner treated it as a distinct issue, nor that the clearing agent was afforded an opportunity to make representations. Accordingly, the decision was procedurally unfair and reviewable on that basis.
The irregularity of the decisions was affirmed by the Commissioner’s failure to provide any reasons when formally requested by the clearing agent to do so under the Promotion of Administrative Justice Act (PAJA). The court observed that in terms of section 5(3) of the PAJA, if an administrative decision-maker fails to provide adequate reasons, then it must be presumed that the decision was taken without good reason. The absence of reasons in this case left unexplained both the rejection of the clearing agent’s submitted proof of export and the separate decision to impose a forfeiture-related penalty. In those circumstances, the only proper inference was that the Commissioner failed to demonstrate rational engagement and discretionary judgment as required by the law.
The court set aside the decisions but remitted the matter back to the Commissioner, rather than making an order in substitution of the Commissioner’s decisions, because the court was not in as good a position as the Commissioner to assess the clearance documents, determine whether the goods were duly exported, and decide whether a penalty should be imposed, nor was the outcome of that exercise a foregone conclusion.
QI Logistics (Pty) Ltd v Commissioner for SARS (180/2025) [2026] ZASCA 96 (3 July 2026)