Delhi High Court Rules GST Evasion Informer Has No Right to Claim Reward
The Delhi High Court has ruled that individuals providing information about alleged GST evasion have no legal right to claim a reward, as the grant is at the discretion of the CBIC.
GstCbicDelhi High CourtTax EvasionInformer RewardReal EstateNov 08, 2025
The petitioner, referred to as “XY,” filed the instant petition claiming that she had supplied information concerning alleged GST evasion by one M/s Shakti Enterprises and was not considered for a reward under a Notification dated July 31, 2015, issued by the Central Board of Excise and Customs (Anti Smuggling Unit), which has been reconstituted and renamed as the Central Board of Indirect Taxes and Customs (CBIC) since 2017.
Following the provision of the information, a show-cause notice was issued to M/s Shakti Enterprises on July 28, 2023, which culminated in an order-in-original dated December 6, 2023, by which substantial demands were raised and penalties imposed. The order-in-appeal was challenged, with the appellate authority setting aside penalties against the partners and leaving only a small demand. Aggrieved by the modification of the penalty and non-grant of a reward, the petitioner approached the High Court.
Gaurav Sharma and Manpreet Kour appeared for the Respondent Union of India, with Samiksha Godiyal, Tenzing N. Bhutia, and B.D. Rao Kundan for the Revenue, relying on the decision of the Supreme Court in Union of India & Ors. v. C Krishna Reddy (2003) to argue that a writ of mandamus cannot be issued at the behest of an informer.
A Division Bench of Justice Prathiba M. Singh and Justice Shail Jain at the outset queried the maintainability of the writ, noting that the petitioner’s status is that of an informer and that an informer cannot convert a claim to a discretionary award into a lis (Latin for a legal dispute or litigation) against the private respondent on merits. Accordingly, the Bench observed that the grant of an award under the scheme initiated by the CBEC is a discretionary grant and prima facie not amenable to challenge as a legal entitlement.
Kumar Utkarsh appeared for the petitioner and pointed out that there is a list of a large number of clients of M/s Shakti Enterprises who had deposited Tax Deducted at Source (TDS) and the taxable value has been wrongly taken by the Department, leading to a small demand being raised in the order-in-appeal passed on 15th July, 2024.
Accordingly, the High Court directed the informer to remain present during the next date of hearing and required the parties to be ready to address the issue of maintainability of the matter. The Court also directed that a properly notarised affidavit containing the petitioner’s full particulars be retained in a sealed cover by the Registry.
Frequently Asked Questions
What is the role of the Central Board of Indirect Taxes and Customs (CBIC)?
The CBIC is responsible for the administration of indirect taxes in India, including Goods and Services Tax (GST). It also handles customs and excise duties.
Can an informer claim a reward for providing information about GST evasion?
No, an informer cannot claim a reward as a legal right. The grant of a reward is at the discretion of the CBIC and is not a legal entitlement.
What happened in the case of XY vs Union of India?
XY, an informer, filed a petition claiming a reward for providing information about alleged GST evasion by M/s Shakti Enterprises. The Delhi High Court ruled that the grant of a reward is discretionary and not a legal right.
What is a writ of mandamus?
A writ of mandamus is an order from a court to an inferior court or a public authority to perform a public duty. It cannot be issued at the behest of an informer to claim a discretionary award.
What is the significance of the Supreme Court decision in Union of India & Ors. v. C Krishna Reddy?
The Supreme Court decision in Union of India & Ors. v. C Krishna Reddy (2003) established that a writ of mandamus cannot be issued at the behest of an informer to claim a discretionary award.
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