Reward for Informing Authorities About GST Evasion is Optional: Delhi High Court 

The Delhi High Court has recently ruled in a case where a petitioner informed about the tax evasion happening in a company, named M/s Shakti Enterprises. The petitioner claimed that under a notification issued in 2015, she was entitled to a reward for providing this information. However, the court clarified that rewards for informants are not a legal right and cannot be claimed as a right.

In this case, the GST department, after receiving the petitioner’s information, issued an order-in-original which included a significant demand for unpaid GST and penalties for the business. However, the penalties were later overturned, and the petitioner challenged the decision before the Delhi High Court.

The Department’s counsel argued that, based on a Supreme Court ruling in Union of India & Ors. v. C. Krishna Reddy, an informant does not have the right to request a writ of mandamus

The bench led by Justice Prathiba M. Singh and Shail Jain held that awarding or giving a prize to an informant is a discretionary decision. The petitioner’s request to challenge the order-in-appeal was not supported by the court, as the informant cannot use the reward claim to dispute the case’s merits.

Even after the petitioner’s claim for reward was rejected, the court did not dismiss the petition. The Delhi High Court has scheduled a further hearing on December 18, where it will hear arguments about the petitioner’s maintainability.