Foreign diplomats can go back to splashing out millions of rand on duty-free booze and cigarettes after the Pretoria high court ruled against attempts by the government to curb what it said was abuse of the diplomatic privilege.
In June, SA expelled several diplomats from Malawi and Lesotho after accusing them of purchasing alcohol and tobacco worth millions of rand at duty-free prices then reselling the products for a profit.
An investigation by the department of international relations & co-operation (Dirco) found one diplomat spent R36m in three months on duty-free alcohol. The South African Revenue Service (Sars) said the practice cost the country R100m a month.
In April, the then finance minister Tito Mboweni and Sars introduced a quota system limiting the quantity of alcohol and tobacco products that diplomats can buy duty free.
But four Pretoria-based retailers selling duty-free products took the government to court, saying the quota system was “unconstitutional, invalid and arbitrary” and violated both local law and international conventions.
The retailers argued that the conventions grant exemption from all custom duties and taxes for diplomats buying items for their personal or official use, and do not provide for any limitation on the amounts purchased.
The applicants said the quotas were arbitrary because the finance minister had shown no evidence of how they had been arrived at.
In response, Sars and other state organs said there was no inconsistency between the quota system and the Vienna Convention on Diplomatic Relations because the convention operated subject to a host country’s laws and regulations.
The government said the quotas were set after Dirco conducted research “relating to the benchmarking of quotas in other jurisdictions as early as 2011".
The retailers argued that this was hearsay, unsupported by evidence, and judge DS Fourie agreed.
These decisions and amendments should be set aside for being arbitrary and irrational
— Judge DS Fourie
“In any event, the mere fact that another country has imposed the quotas does not make the minister’s decision rational,” Fourie said.
“The allegation that Dirco conducted research ‘to the benchmarking of quotas’ appears to be a general statement without giving any particularity.”
The court said it could not assess Mboweni’s assertion that the decision was reasonable, and the failure to provide supporting evidence showed the quotas were based on shaky grounds.
“On the contrary, it appears that these decisions are the result of a random selection of quantities without demonstrating how these quantities were determined,” Fourie said.
“Taking into account all these shortcomings, it seems reasonable to conclude that the public power exercised by the functionaries is arbitrary and these decisions are not rationally related to the purpose for which the power was given.
“This leads me to the conclusion that these decisions and amendments should be set aside for being arbitrary and irrational.”
At the time the quotas were introduced, Mboweni said steps were needed to prevent diplomats from abusing their privileges.
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