Reward to informer of GST evasion discretionary, cannot be claimed as right: Delhi High Court

The Delhi High Court recently stated that reward to a person who informed authorities about Goods and Service Tax (GST) evasion is discretionary and it cannot be claimed as a right [XY vs Union of India and Ors].

The petitioner told the Court that she had provided information regarding GST evasion by a company M/s Shakti Enterprises, but was not given any reward by the Central Board of Excise and Customs (Anti Smuggling Unit) as per its notification dated July 31, 2015. 

Justice Prathiba M Singh and Justice Shail Jain stated that the grant of an award or a reward to an informer is discretionary and it cannot be claimed as a right. 

“In the opinion of this Court, the grant of an award or a reward to an informer is a discretionary grant and prima facie, the petitioner is not entitled to challenge the order-in-appeal, since the status of the Petitioner is that of an informer. Such a person cannot create a lis on the ground of claiming of an award and contest the private Respondent on merits,” the Court stated. 

Upon receiving the information from the petitioner, the GST department had passed an order-in-original in which a substantial demand was made and penalty was imposed on the company.

However, in the order-in-appeal, the decision was modified and penalties raised were set aside.

The petitioner challenged this order-in-appeal before the High Court. 

The counsel for the Department too opposed the plea and relied on the decision of the Supreme Court in Union of India & Ors. v. C Krishna Reddy to argue that a writ of mandamus cannot be issued at the behest of an informer.

The Court did not dismiss the petition though it said that an informer cannot claim an award as a matter of right.

The Court will hear the parties on maintainability of the petition on December 18.

Advocate Kumar Utkarsh appeared for the petitioner.

Advocate Gaurav Sharma and Manpreet Kour appeared for Union of India. 

[Read order]