Sars seizes liquor distributor's goods over unpaid tax

The SA Revenue Service (Sars) has seized the goods of Cape Town-based liquor distributor Karino Homeland Distribution on suspicion the company diverted a consignment meant for Mozambique into the local market without duties and VAT being paid to the fiscus.

Karino, which distributes Scottish whiskies and liqueurs, Irish whiskies, Armagnacs and Italian craft liquors, tried unsuccessfully to get the Western Cape High Court to force the tax agency to release its goods, arguing they are worth more than the debt claimed by the agency.

At the heart of the dispute is the December 2022 transaction that saw Karino import into SA from Namibia a shipment of alcohol that was declared to be in transit to Mozambique.

Sars insists that Karino misled it and that the shipment, worth nearly R1m, was meant for sale in SA. The tax agency then furnished Karino with a R3m tax bill after it failed to furnish it with proof that the shipment made its way to Mozambique.

The agency, headed by Edward Kieswetter, in March 2023 detained a total stock value of about R10m from Karino.

Sars also issued a further R3.9m tax liability against Karino for a separate consignment meant for Zimbabwe.

Karino disputed the Zimbabwe tax liability and claimed it provided Sars with all the required documentation and information as proof that the second consignment to Zimbabwe was properly exported.

Sars argued that the documentation provided to it by the company had been falsified.

The company, established in 1995, in November approached the court asking it to release its goods. However, the Western Cape High Court on Wednesday dismissed Karino’s application.

“It is irrefutable that the parties engaged in settlement negotiations in this matter. From the time Sars sent a demand to the applicant, the parties discussed the matter. The applicant made proposals for the payment of the debt and even made an application for the deferred payment arrangement for the admitted debt,” reads the judgment.

“Among others, on 20 August 2023, the applicant proposed to settle the tax liability for the Mozambique consignment by paying the sum of R250,000 per month for three months while settlement negotiations between the parties were ongoing. The negotiations continued even after the notice to institute proceedings against Sars in terms of section 96 of the act was issued. To be precise, the discussions between the parties continued ever since the lien was imposed until November 2023.”

Business Day in October reported that the SA fiscus will save R100m a month after the Constitutional Court confirmed a move to shut the door on diplomats getting alcohol and tobacco products duty-free — a privilege the National Treasury suspects was abused as some dignitaries were selling the products on the black market.

According to the SA Revenue Service’s calculations, the fiscus was losing about R100m a month due to illegal trading of duty-free products by diplomats. In response to this trend, the finance minister amended sections of the Customs and Excise Act and VAT Act in 2021 to do away with duty-free components when alcohol and tobacco products are sold to diplomats.

Before this action, they were entitled to a full rebate on the duty ordinarily payable in respect of goods purchased by them. The diplomats could purchase an unlimited quantity of alcohol and tobacco products.

Khumalok@businesslive.co.za