Controversial cigarettes manufacturer Gold Leaf Tobacco Corporation (GLTC) and its directors have been slapped with a preservation order by the North Gauteng High Court following the South African Revenue Services (Sars) application.
The order will prevent the Zimbabwean-owned company from dissipating realisable assets and thereby frustrating the collection of taxes. Sars applied for the court to issue a preservation order after arguing that GLTC was part of illicit tobacco industry which was cheating the taxman of his dues.
On Friday, Sars welcomed an order by the North Gauteng High Court granting a preservation order in terms of section 163 of the Tax Administration Act No. 28 of 2011 against GLTC and its directors, Simon Rudland and Ebrahim Adamjee. Sars said it has been investigating and clamping down on the illicit economy focusing on tobacco, gold and fuel industry over the last year, and this was one of the many enforcement steps executed.
Sars Commissioner Edward Kieswetter said they were harnessing their capabilities to make non-compliance with legal tax obligations hard and costly to those who are engaged in this criminal pursuit.
He said the preservation order was obtained to prevent realisable assets from being dissipated thus frustrating the collection of taxes.
“The conduct of non-compliant taxpayers is depriving Government of legitimate resources to the prejudice of both the State and the South African public. In aggressively addressing this scourge, SARS will continue to pursue its mandate without fear, favour or prejudice,” Kieswetter said.
A report commissioned by British American Tobacco South Africa (BATSA) and conducted by market research firm Ipsos last year revealed that Gold Leaf Tobacco Corporation's products were among the cheapest on offer in the market, priced below the minimum collectable tax amount of R21.60 instead of the minimum price of R28 per pack of 20 cigarettes.
At the time, GLTC emphatically denied all and any allegations of illicit trading and instead said that it was making a significant steady contribution of R200 million per month to the South African economy through the payment of all its taxes.
GLTC holds the distribution rights for cigarettes brands Voyager, RG, Chicago, Sahawi, Sharp and Savannah, which are sold both in the South African and export markets. The Ipsos study found that the illicit tobacco sales were depriving the fiscus of more than R19 billion a year. Tax Justice South Africa on Friday said the preservation order against was a watershed moment in the battle against organised crime groups who are looting South Africa on an unprecedented scale.
Tax Justice founder Yusuf Abramjee said this was a huge breakthrough in the battle against the illicit cigarette trade that robs South Africa of R19 billion a year.
“For over a decade, GLTC have been the prime suspects as South Africa’s illegal cigarette trade has grown into a national menace of devastating proportions," Abramjee said.
“Sars, under Commissioner Edward Kieswetter, deserve huge credit for making this massive and brave first step. We must all now help and support them as they pursue both our money and the people who have been taking it from us. Prosecuting authorities must now ensure that the masterminds of this industrial-scale theft are brought to justice and feel the full might of the law. Lock them up.”
BUSINESS REPORT