15-Year Delay in Rewarding Informant for Tip-Offs Leading to Sales Tax Recovery: Bombay HC Orders ₹19L Payout [Read Order]

In a recent judgment, the Bombay High Court ordered the Maharashtra Government to pay ₹19,44,802 to an informant who had provided valuable information and tip-offs that led to significant sales tax recoveries. The informant was due to receive rewards for his work, but had been made to wait for over fifteen years due to protracted litigation and bureaucratic delays.

The facts of the case traces back to 1992 when the Petitioner Darshan Singh Parmar began submitting valuable information to the Sales Tax Department, exposing wide-scale tax evasion particularly highlighting connections between public sector oil companies and certain fisherman co-operative societies.

The Petitioner, represented by D. S. Sakhalkar and Himanshu Thakur instructed by Suresh Patil asserted that under the Government Circular dated 01 January 1976, the state was obliged to provide monetary rewards to informants whose inputs result in tax recovery; thus he was entitled to a significant reward for his contributions.

Neeta V. Masurkar and Himanshu Takke appeared for the Respondents and contended that while the Petitioner claimed that the Department recovered an amount of ₹361 crores using his information, only an amount of ₹55.98 crores was recovered inclusive of tax and interest.

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They further argued that payment of rewards was contingent upon irrevocable realisation of dues, and pointed to a later Government Resolution dated 5 June 2007 which they claimed had superseded the earlier 1976 circular relied on by the Petitioner. However, the petitioner contended that the 2007 Resolution itself clarified that it would apply to pending reward applications, such as the Petitioner’s.

The Division Bench of Justice M.S. Sonak and Justice Jitendra Jain noted that even though the authorities had acknowledged tax recovery attributable to the Petitioner’s information, they delayed reward disbursal on various pretexts.

The Court found that the recoveries became final under the 2019 Amnesty Scheme, and the Department made a determination on 4 October 2024, approving a reward amount of ₹19,44,802 to the petitioner.

However, they withheld the reward on the ground that the Petitioner had failed to file information in Form-A - and so such reward would not be payable. Amusingly, the Bombay High Court noted that the Form-A was in fact annexed to the Petition and that the departmental advocate had failed to take cognisance of the annexures towards the petition to unfairly deny the petitioner’s reward..

Also noting that the Department had at no point in time since 2013 raised the requirement of filling Form - A to claim the reward. The petitioner had claimed that the amount determined by the Department was too meagre and claimed that a higher amount was payable.

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Given the lack of information at the time, the High Court directed that an amount of ₹19,44,802 be paid to the Petitioner within six weeks from the date that the present order is uploaded, else the same would accrue interest at 8% per annum, which may be recovered from the officers responsible for the delay.

The Sales Tax Commissioner and the Finance Secretary, State of Maharashtra were further directed to determine the precise amount payable to the petitioner within six months and pay the same to the petitioner.

The Division Bench also proclaimed that once a reward scheme is formulated, it must be fairly and transparently implemented. Citizens who provide valuable information leading to revenue recovery should not be made to suffer bureaucratic apathy.

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