High Court confirms preservation order against Amalgamated Tobacco Manufacturing in tax evasion case

TAX Justice South Africa (TJSA) in a statement on Tuesday welcomed a High Court judgment confirming a preservation order against Amalgamated Tobacco Manufacturing and 19 other entities, who are accused of a sophisticated multi-million-rand tax evasion racket. The Fair-Trade Independent Tobacco Association (FITA), who represents independent cigarette manufacturers, respects the judicial process and the role of the courts in upholding the rule of law.

In the judgment, the High Court of South Africa, KwaZulu-Natal Local Division, Durban ruled that the provisional preservation order granted on February 27, 2025 against the ninth and tenth respondents (South African Revenue Service v Kajee and Others) is confirmed.

TJSA said that the KwaZulu-Natal High Court has dismissed challenges to the South African Revenue Service’s preservation order, allowing Sars to continue securing assets while investigating more than R96 million in suspicious financial transfers involving the Pietermaritzburg-based cigarette maker.

TJSA founder Yusuf Abramjee said that this case demonstrates exactly why Sars needs robust investigative powers and why the illicit tobacco trade continues to devastate our fiscus. “When a court finds a tobacco manufacturer has a case to answer over millions in under-declared income, it confirms what we’ve been saying for years – the industry is riddled with tax dodgers who are bleeding our country dry.”

TJSA said that Amalgamated Tobacco – as well as local industry body the Fair-Trade Independent Tobacco Association (FITA) – is fighting Sars’s legal right to install surveillance cameras in cigarette factories.

Abramjee said that while legitimate manufacturers should welcome transparency measures, those opposing surveillance systems clearly have something to conceal. “If the allegations in this case are true, then it will vindicate Sars’s approach to enhance monitoring of the tobacco sector. The illicit cigarette trade now commands more than 70% of the South African cigarette market, robbing the country of approximately R30 billion in tax revenue annually. This massive revenue loss undermines public health initiatives, education funding, and essential government services.”

Abramjee added that this R96 million case is just the tip of the iceberg. “The Government must ensure that Sars has the resources to expand these investigations to other major players in the illicit tobacco trade.”

FITA chairperson Sinenhlanhla Mnguni said that they note the recent judgment delivered by the High Court of South Africa, KwaZulu-Natal Local Division, Durban, in the matter of Commissioner for South African Revenue Service v Kajee and Others (Case No. D1514/2025). “FITA respects the judicial process and the role of the courts in upholding the rule of law. FITA has consistently and unequivocally supported all legitimate efforts by the state, regulatory authorities, and industry stakeholders to combat smuggling and the illicit trade in cigarettes. These illicit activities undermine the integrity of the market, deprive the fiscus of vital revenue, and harm legitimate businesses across the sector.”

Mnguni added that they commend any actions that promote transparency, accountability, and fair competition, and stand ready to collaborate with Sars and other entities to eradicate these threats. “Compliance in the tobacco industry must be approached holistically, taking into account the full spectrum of challenges and dynamics at play. It is concerning when enforcement appears to be selectively focused on isolated aspects, potentially overlooking broader systemic issues that contribute to non-compliance. This narrow lens risks distorting the true picture of the industry, which is far more complex.”

Mnguni said that they urge all stakeholders, including Sars, to adopt a comprehensive and equitable strategy that addresses root causes such as economic disparities, regulatory gaps, and unfair trade practices affecting smaller, independent players. “Only through such a balanced approach can we achieve sustainable compliance and a level playing field for all participants in the South African tobacco market.”

Professor Corné van Walbeek, the director of the Research Unit on the Economics of Excisable Products, from the University of Cape, said that illicit trade in South Africa is a very serious matter. “The illicit trade in cigarettes accounts for more than 50% of the total market. A large proportion of illicit cigarettes in South Africa are under-declared local production. The fact that Amalgamated Tobacco Manufacturing Company has been charged for tax evasion by Sars is long overdue.”

BUSINESS REPORT