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2025 (6) TMI 1668 - HC - VAT / Sales TaxDirection to Respondents 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 - HELD THAT - From the various Affidavits filed in this Petition it is satisfied 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. In the communications dated 7 September 2015 and 4 October 2024 a determination was made as a result of which the Joint Commissioner of Sales Tax decided that an amount of Rs. 19, 44, 802/- was payable as a reward to the Petitioner. At this stage based on the scant material placed on record by the parties it would not be possible to determine this amount in this Petition. However we cannot appreciate the difficulties the Respondents are imposing on the Petitioner in paying the amounts that they have themselves determined to be due and payable to the Petitioner. 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 only defences were that no reward is payable unless the revenue is irrevocably realised. It was pointed out that the recoveries were subject matters of appeals etc and until all these were disposed of no reward could be paid. After these issues were sorted out and even the reward amount was determined this latest defence has been raised without verifying the records or factual position. The Respondents is directed to pay Rs. 19, 44, 802/- to the Petitioner within six weeks from the date this order is uploaded. If the payment is not made within this period it will accrue interest at 8% per annum. The Respondents must pay this interest but it should be recovered from the officers responsible for the delay. The Finance Secretary after paying the interest if necessary must conduct an inquiry to identify the officers responsible and recover the interest from them. This is to ensure that taxpayers are not burdened with the delay caused by officers lethargy in complying with the Court s orders. The Sales Tax Commissioner and the Finance Secretary State of Maharashtra must within six months from today determine the precise amount of rewards payable to the Petitioner and upon such determination pay the reward amount to the Petitioner within two months. The Sales Tax Commissioner and the Finance Secretary must 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 - 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. Petition disposed off.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court include: (a) Whether the Petitioner is entitled to a reward for providing information leading to tax recoveries by the State Government and its Sales Tax Department, pursuant to the Government Circular/Resolution dated 1 January 1976 and subsequent resolutions. (b) Whether the reward payment can be withheld on the ground that the tax revenue has not been irrevocably realized due to pending appeals and recovery proceedings. (c) Whether the Government Resolution dated 5 June 2007 supersedes the earlier 1976 Circular and applies to pending reward claims. (d) Whether the Petitioner's failure to submit information in the prescribed Form-A disentitles him from receiving the reward. (e) The extent of the quantum of reward payable and the procedural and substantive obligations of the Respondents in determining and paying the reward. (f) The consequences of delay and non-compliance by the Respondents in paying the reward, including the imposition of interest and departmental accountability. 2. ISSUE-WISE DETAILED ANALYSIS (a) Entitlement to Reward for Information Leading to Tax Recovery The Petitioner, since 1992, supplied information to the Sales Tax Department exposing tax evasion, notably involving Public Sector Oil Companies and Fisherman Co-operative Societies. The Petitioner relied on the Government Circular dated 1 January 1976, which provided for payment of rewards to informants whose information led to tax recoveries. The Court examined the facts that the Petitioner's information was instrumental in initiating investigations, arrests, and filing of charge sheets, as affirmed in affidavits filed by the CBI and Finance Department. Despite this, the Respondents delayed or refused payment of the reward. The Court noted that the Petitioner's claim was supported by Right to Information disclosures indicating substantial recoveries attributable to his information. The Respondents initially contested the quantum but did not deny that recoveries were made on the basis of the Petitioner's inputs. The Court emphasized that the Government's own Circular/Resolution envisaged payment of reward to citizens who provide valuable information leading to tax recovery, and that failure to pay such reward would discourage citizens from assisting the Revenue, ultimately harming public interest. (b) Effect of Pending Appeals and Non-Irrevocable Revenue Recovery on Reward Payment The Respondents contended that the reward was payable only after the revenue was "irrevocably realized," i.e., after disposal of all appeals and references, to avoid paying rewards prematurely in case recoveries were reversed. The Court analyzed the Government Resolution dated 5 June 2007, which superseded the 1976 Circular and explicitly stated that rewards are payable only when revenue is irrevocably realized. The Court accepted this as a valid procedural safeguard but held that it should not be used to indefinitely delay payment once recoveries have reached finality. The Court observed that the Respondents had been slow and ineffective in pursuing recovery, causing undue delay in finalizing appeals and thereby withholding the reward unjustifiably. The Court directed the Respondents to determine the amount of revenue irrevocably realized and pay the corresponding reward without further delay. (c) Supersession of the 1976 Circular by the 2007 Government Resolution The Respondents argued that the 2007 Resolution superseded the 1976 Circular and governed all pending reward claims. The Court acknowledged this but noted that paragraph 2.3 of the 2007 Resolution explicitly applied it to all pending applications, thus requiring the Respondents to apply the updated scheme fairly. The Court also highlighted that the 2007 Resolution's condition of irrevocable revenue realization did not absolve the Respondents from their duty to expeditiously finalize appeals and pay rewards. (d) Requirement of Submission of Information in Prescribed Form-A In a late-stage defense, the Respondents contended that the Petitioner had not submitted information in the prescribed Form-A, thereby disqualifying him from receiving any reward. The Court found this defense to be raised only after years of litigation and without proper verification of records. The Court noted that the Petitioner had indeed submitted Form-A, which was appended to the Petition, and that this defense was a tactical attempt to delay payment. The Court rejected this belated objection and reaffirmed the Petitioner's entitlement to reward subject to compliance with procedural requirements already satisfied. (e) Quantum of Reward and Procedural Obligations of Respondents The Court reviewed the communications and affidavits filed by the Respondents, including the calculation dated 4 October 2024, which determined the reward payable to the Petitioner as Rs. 19,44,802/- based on the tax recovery of Rs. 12.93 crores irrevocably realized under the Amnesty Scheme 2019. The Court examined the reward slabs and percentages prescribed in the 2007 Government Resolution and found the calculation consistent with the scheme. However, the Petitioner claimed entitlement to a higher amount, but the Court held that determination of any additional amount would require further proceedings and evidence. The Court directed the Sales Tax Commissioner and Finance Secretary to determine the precise amount of reward payable within six months, provide full particulars of recoveries, pending appeals, and consider the Petitioner's submissions transparently. (f) Delay, Non-Compliance, and Accountability The Court expressed strong disapproval of the Respondents' repeated delays, vague affidavits, and failure to comply with Court orders. It noted that despite several orders spanning years, the Respondents neither took effective recovery steps nor paid the reward promptly. The Court ordered that the determined reward amount of Rs. 19,44,802/- be paid within six weeks, failing which interest at 8% per annum would accrue, to be recovered from the responsible officers. The Finance Secretary was directed to conduct an inquiry to identify officers responsible for delay and recover the interest from them, ensuring that taxpayers are not burdened by administrative lethargy. The Court emphasized that the Government's reward scheme must be operated fairly and transparently, without causing frustration to informants who act in public interest. 3. SIGNIFICANT HOLDINGS The Court held: "If the Department initially gives an impression to the citizens that upon receipt of the information from them, tax recovery is made, then in that event, a part of that recovery would be paid to such citizen as a reward and subsequently does not abide by the representation and pay the amount of reward, such a conduct would be against the interest of Revenue itself." "Citizens who, acting on the representation made by the Government, give some valuable information and upon receipt of such information the tax recoveries are made and subsequently, the citizens are made to run from pillar to post for getting such reward, citizens would lose faith in the system and would not come forward to give the information. This would result in a loss to the Public Exchequer." "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 Respondents are aware of this, and therefore, considerable time was wasted by not precisely informing the Court of the number of recoveries made irrevocably." "There is no basis for the Respondents to now retract and refuse payment of even this amount, which has been determined by them." "If the payment is not made within this period, it will accrue interest at 8% per annum. The Respondents must pay this interest, but it should be recovered from the officers responsible for the delay." "The Sales Tax Commissioner and the Finance Secretary must 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 practice of raising frivolous and belated objections only to avoid legitimate payments must also be eschewed." Final determinations include: - The Petitioner is entitled to a reward for information leading to tax recoveries under the Government's reward scheme. - The reward is payable only after irrevocable realization of revenue, but delays in recovery and appeals must not be used to indefinitely withhold payment. - The Respondents must pay the determined amount of Rs. 19,44,802/- within six weeks with interest for delay, and conduct inquiry into delay. - The Respondents must transparently determine and pay any further reward due within six months, providing full particulars to the Petitioner. - The procedural defense of non-submission of Form-A is rejected as a belated and unsubstantiated attempt to deny reward.
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