A couple who face 164 counts of tax fraud charges regarding alleged illicit cigarettes failed in a court bid to prevent the SA Revenue Service (Sars) from participating in high court proceedings after they sought to challenge Sars’ evidence being allowed in the fraud trial.
The evidence, which comprises goods seized from their warehouse, is being used by the prosecution in the ongoing, but now stalled, criminal trial.
The Supreme Court of Appeal (SCA) slammed the accused couple, Walter and Letisha Cyril, noting that “piecemeal” litigation was to be discouraged and could not be the norm, especially for criminal cases in SA.
As a result, the SCA said all courts must “caution” against such litigation for “the attainment of justice”. Because it is the SCA, this sets a precedent that all high courts must follow in discouraging fragmented litigation.
SCA judge Trevor Goren struck the matter from the roll.
The couple’s challenge regarding the admissibility of Sars’ evidence will now continue before the Johannesburg high court, where Sars can now participate. No date has been set.
Piecemeal litigation is where a litigant makes various interim applications, resulting in matters being stalled and argued in chunks in different courts. This is often part of what some regard as “Stalingrad” tactics because interim court bids delay the finalisation of the main matter. Former president Jacob Zuma has been accused of this, resulting in long delays in his criminal trial.
In this case, the couple’s criminal trial in the magistrate’s court has been suspended until the hearing regarding Sars’ evidence is argued in the Johannesburg high court.
In his judgment, Gorven noted even “the [pending] review application [in the Johannesburg high court] itself amounts to piecemeal litigation” because of its effect on the suspended criminal trial.
That the Cyrils then appealed against Sars’ participation all the way to the SCA, “further exacerbated” the piecemeal litigation the SCA warned against.
According to National Prosecuting Authority (NPA), the couple, former directors of companies CEW Logistics and Tish Maritime, allegedly formed part of a R120m fraud scheme with some Sars officials selling contraband cigarettes.
The NPA claims the couple imported cigarettes from Zimbabwe and then falsely claim the cigarettes were shipped to Mozambique. Sars officials would allegedly affix custom stamps to documents, knowing the cigarettes would remain in SA and sold without duties or VAT payments.
During the investigation, Sars inspected and seized goods from one of the couple’s warehouses. It is these goods the NPA want to use in the suspended criminal trial.
The Cyrils claimed the goods could not be used as evidence because the Constitutional Court in 2014 ruled that parts of the legislation on which Sars relied to seize the goods, the Customs and Excise Act, had been declared unconstitutional.
The Cyrils asked for a hearing to argue this at the Johannesburg high court. Sars, on learning of the couple’s challenge to its evidence, asked to participate in the hearing, which the Cyrils opposed all the way to the SCA.
Gorven noted Sars had a vested interest and could assist the high court at the coming hearing to decide on the admissibility of Sars’ own evidence. No date has been set yet for that hearing, so it is unknown how long the whole criminal trial will be suspended.
The illegal cigarette trade has been a bugbear for the government and companies, especially since Covid-19. The losses in unpaid excise tax and VAT from illicit cigarettes amounted to R18bn in 2022, University of Cape Town researchers have found, with the government losing R119bn from 2002 to 2022.
The illegal cigarette market accounted for about 58% of the SA market in 2022. British American Tobacco SA (BATSA) now sells 40% fewer cigarettes than it did in 2020, and is in retrenchment talks with some staff.
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