Supreme Court in ANI Tax Evasion Case: Orders Centre to Reconsider Reward Paid to Whistleblower

Supreme Court in ANI Tax Evasion Case: Orders Centre to Reconsider Reward Paid to Whistleblower

The Supreme Court has directed the Ministry of Finance’s reward committee under the ‘Reward to Informers’ policy to take a fresh decision on the amount of reward awarded to a person who gave information regarding the tax evasion by news agency M/s Asian News International (ANI) Media Pvt Ltd.

The division bench comprising of Justices Abhay S. Oka and Sanjay Karol observed, “The minutes show complete non-application of mind on the prayer made by the appellant. It is well settled that if the decision-making authority does not record reasons for coming to a particular conclusion, the reasons cannot be supplied by filing affidavits.”

The informant/appellant before the Supreme Court contended that he had provided information to the authorities about the service tax evasion of Rs. 2.59 crores by M/s Asian News International (ANI) Media Pvt Ltd.

The appellant claimed that upon giving such information, the defaulter came forward and voluntarily paid the service tax dues of Rs. 2.59 crores.

The appellant claimed that he was entitled to a reward of Rs. 51.80 lakhs based on clause 4.1 of the policy, however, the Reward Committee had sanctioned a final reward of Rs. 5.50 lakhs to the appellant.

According to Clause 4.1 of the ‘Reward to Informers and Government Servants Review of Policy-Procedure and Guidelines’ issued by the Ministry of Finance (Department of Revenue), Central Board of Excise and Customs, the reward is up to 20% of the amount evaded plus the amount of fine and penalty levied.

Aggrieved by the quantum of reward given, the appellant filed a petition under Article 226 of the Constitution before the Bombay High Court in 2015.

The Principal Commissioner of Service Tax admitted that the concerned person proved the information about the news agency ANI.

In the affidavit submitted by the Principal Commissioner of Service Tax, he also admitted that sanctioned a final reward of Rs. 5.50 lakh to the appellant on the basis of the information provided by him.

The appellant vehemently refused the stand taken by the department and filed a rejoinder before the High Court stating that he was only required to give information with regard to the evasion of service tax.

In the event the information is true and based on that recoveries are effected, then, the reward circular mandates computation of the sum based on the quantum thereof, and not how the authorities arrive at any figures and attributable to the information.

Thus, he argued that it was not possible for the authorities to bifurcate the information and attribute to the petitioner only that part of it, which results in actual recoveries.

In 2016, the division bench of the Bombay High Court held that the writ petition involved disputed questions of fact and advised the appellant to file a civil suit.

The appellant approached the Supreme Court challenging the High Court’s decision.

The Supreme Court held that the reward committee did not apply its mind while granting the reward. The Court emphasized that a decision-making authority must provide well-founded reasons for reaching a particular conclusion.

It was noted by the bench that in 2018, the Additional Solicitor General had informed that a decision has been taken to enhance the reward as Rs 9.45 lakhs. This was also taken as a factor by the Court to hold there was no proper application of mind regarding the decision.

Moreover, the bench underlined that as per Clause 4.1 of the Policy, the reward is up to 20% of the amount evaded plus the amount of fine and penalty levied. The bench noted that as per the policy, a committee comprising three members is empowered to take a decision regarding the reward.

After examining the Union’s affidavit which relied on a note-sheet, the Court noted that the official Minutes did not mention any decision based on such notes.

Consequently, the Court raised concerns regarding the lack of reasons provided in the decision to restrict the appellant’s reward to Rs. 5.50 lakhs instead of the 20% entitled under the Policy. It also pointed out the order passed in 2018 where ASG had submitted that award was enhanced to Rs. 9.45 lakhs which displayed clear non-application of mind.

The Court allowed the appeal partly and directed the committee to reconsider the case of appellant and determine if a higher amount is payable to the appellant.

The bench ordered the committee to come up with a fresh decision within 6 months.

The news agency has expressed its objection via social media platform- twitter stating, “There has been an attempt to mischaracterise an order passed by the Supreme Court in unrelated proceedings where ANI is not even arrayed as a party. Any insinuation or suggestion of any wrongdoing is mischievous and defamatory.”

The news agency’s contention appears to be that it had paid the tax as demanded, the subsequent dispute was between the informer and the Finance Ministry, and its name is now being unnecessarily dragged into it.