Reward Schemes Must Be Fairly Implemented: Bombay High Court Directs Dept To Pay Informer For Assisting In Tax Recovery

Justices M.S. Sonak and Jitendra Jain stated that “If the Government has formulated a reward scheme, it must be implemented fairly and transparently. Informers who take risks and invest time must not be made to run from pillar to post to secure what may be due and payable. There must be no unreasonable delay in paying the determined reward amounts, and the practice of raising frivolous and belated objections only to avoid legitimate payments must also be eschewed.”

In this case, the Petitioner, since 1992, has been submitting information to the Sales Tax Department regarding tax evasion and evaders.

The petitioner has filed a petition seeking a direction to the respondent/department to reward the Petitioner for valuable information provided by the Petitioner to the State Government and its Sales Tax Department from 1992 onwards, based upon which, the sale tax recoveries were made from the tax evaders.

The Petitioner claims that, based on the information provided, substantial tax recoveries were made following the Petitioner's complaints. Nonetheless, for no apparent reason, the rewards were not being paid to the Petitioner.

Referring to various affidavits the bench observed that the Respondents do not wish to comply with their own Circular/Resolution regarding the payment of reward to the Petitioner.

Even after accepting the Respondents' contentions that the revenue must be irrevocably realised, some reward is still due and payable to the Petitioner. The Respondents are aware of this, and therefore, considerable time was wasted by not precisely informing the Court of the number of recoveries made irrevocably, noted the bench.

The bench opined that “once the Government formulates a reward scheme, it should be operated fairly and squarely. The informers, based on whose information, tax evaders are brought to book and taxes recovered, should not be made to run from pillar to post or otherwise suffer frustration.”

The bench directed the Sales Tax Commissioner and the Finance Secretary to supply the Petitioner with full particulars of the recoveries made, the status of pending appeals, etc., and hear the Petitioner, and consider all the documents produced by him.

The bench further directed the Sales Tax Commissioner and the Finance Secretary, State of Maharashtra to determine the precise amount of rewards payable to the petitioner and pay the reward amount to the petitioner within two months.

In view of the above, the bench allowed the petition.

Case Title: Darshan Singh Parmar v. The Union of India

Case Number: WRIT PETITION NO. 2283 OF 2013

Counsel for Petitioner: D. S. Sakhalkar with Himanshu Thakur

Counsel for Respondent: Neeta V. Masurkar, for Respondent Nos. 1 and 4 and Himanshu Takke, AGP, for the Respondent Nos. 2 and 3.

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