LI Network
Published on: 30 July 2023 at 15:45 IST
The Supreme Court recently directed the reward committee, constituted by the Ministry of Finance under the “Reward to Informers” policy, to review its decision on the amount of reward awarded to an individual who provided information regarding tax evasion by news agency M/S ANI Media Pvt Ltd.
The appellant in the case claimed to have provided information to the authorities about the service tax evasion amounting to Rs. 2.59 crores by M/s Asian News International (ANI) Media Pvt Ltd.
The appellant stated that as a result of his information, the defaulter voluntarily paid the service tax dues.
However, the reward committee sanctioned a final reward of Rs. 5.50 Lakhs to the appellant, which he contested, arguing that he is entitled to Rs. 51.80 Lakhs as per the policy.
Under Clause 4.1 of the “Reward to Informers and Government Servants Review of Policy-Procedure and Guidelines,” the reward is up to 20% of the amount evaded plus the amount of fine and penalty levied.
The appellant filed a petition before the Bombay High Court in 2015, challenging the quantum of the reward given.
The High Court admitted that the appellant provided information about ANI Media’s tax evasion, and the reward committee based its decision on the information and investigation. However, the appellant argued that the reward should be calculated based on the amount recovered and not how the authorities arrive at figures.
Upon analysis, the Supreme Court found that the reward committee did not apply proper reasoning while granting the reward and failed to provide well-founded reasons for their conclusion.
The Court held that subsequent attempts to supply reasons through affidavits were insufficient.
The Court allowed the appeal partially and directed the committee to reconsider the appellant’s case and determine if he is entitled to an amount higher than the one already given.
The Court emphasized that under Clause 4.1 of the Policy, the reward can be up to 20% of the amount evaded plus the fine and penalty levied. It also raised concerns about the lack of reasons provided for restricting the appellant’s reward to Rs. 5.50 lakhs instead of the entitled 20%.
The Court pointed out that in 2018, the Additional Solicitor General had mentioned an enhanced award of Rs. 9.45 lakhs, which further highlighted the lack of proper application of mind in the decision-making process.
The Court directed the committee to reconsider the appellant’s case and make a decision within six months.