2018 (3) TMI 286 - HC - Customs

Court denies reward claim, finds info not basis for investigation, upholds confidentiality of intelligence process.

The court dismissed the petition, ruling that the petitioner's claim for a reward was rightfully denied. It found that the petitioner's information did ... Reward scheme - reward for disclosed vital information about evasion of tax / public revenue - the grievance of the petitioner is that his reward which was allegedly due and payable is withheld on untenable grounds - Held that: - the petitioner claims that a case has been booked on the basis of specific and elaborate information provided by him but the amount of deposit is just a peanut. The tax evader should have deposited much more and the petitioner hopes that the investigation has not missed out anything. Then he says that he is entitled to an advance reward but he will forward further emails to DRI to fetch more revenue in this case. In the case at hand there is a dispute as to whether the department indeed relied on the information or the details provided by the petitioner. It specifically denies that it has so relied on the same. It says that it has its own sources to obtain information and its own intelligence generated led to investigations being carried out much prior to the petitioner coming on the scene. The petitioner came on the scene on January 2015 and the department claims to have obtained the information in April 2014 and in relation to certain transactions by the courier mode. Thus the petitioner has occasion of obtaining these details of the information collected and generated by the department from his own sources and encashing upon the same. The petitioner is accused of having relied on this very piece of information available with the department but without its details and he commenced correspondence in January 2015. He commenced correspondence about those cases which were already under the scanner of the department. The department had an in-house investigation mechanism and which it resorted to. It did not rely on the information made available by the petitioner. The petitioner's emails did not gave the details as were necessary and that is why the respondents have raised a dispute on the petitioner's right or entitlement to reward. Even the initial entitlement or an advance reward is disputed and that was not granted. The petitioner relies upon his e-mails but conveniently omits to give details of how the proceedings ended. The petitioner claims that it was his information which led to the investigations but the department says otherwise. From inception therefore there is a clear factual dispute The petitioner's entitlement being not consistent with the policy or guidelines as noted by the Revenue, in writ jurisdiction we are not inclined to consider it - petition dismissed. Issues Involved:1. Entitlement to Reward2. Validity of Information Provided3. Department’s Use of Information4. Procedural Fairness and Natural Justice5. Discretion of Reward Granting AuthorityIssue-wise Detailed Analysis:1. Entitlement to Reward:The petitioner claimed entitlement to a reward under a scheme framed by the respondents for providing vital information about tax evasion. He argued that his information led to the investigation and the eventual recovery of Rs. 6 crores from M/s. ICC Worldwide Pvt. Ltd. The petitioner asserted that he had taken significant risks and spent his own money to gather and forward this information, expecting a reward as per the department’s policy.2. Validity of Information Provided:The petitioner detailed how he monitored the activities of e-commerce companies and identified M/s. ICC Worldwide Pvt. Ltd. as a major tax evader. He provided information about the misuse of customs duty concessions and the smuggling activities of the company. The petitioner communicated this information to Mr. P. K. Dash and other officials via WhatsApp and email, expecting it to be treated as DRI-I (information report) under the reward policy.3. Department’s Use of Information:The respondents, represented by the Directorate of Revenue Intelligence (DRI), argued that the investigation against M/s. ICC Worldwide Pvt. Ltd. was based on institutional information and intelligence gathered by the department’s own sources, not on the petitioner’s inputs. The DRI claimed that the petitioner’s information was vague and did not lead to the discovery of any new facts. They maintained that the department had already been investigating the company based on information received from other government agencies, including the Central Bureau of Investigation (CBI).4. Procedural Fairness and Natural Justice:The petitioner contended that the department’s refusal to grant him a reward was arbitrary and violated principles of natural justice. He argued that the impugned communication denying the reward was unreasoned and non-speaking. The petitioner also claimed that he was not given an opportunity to present his case before the deciding authority, despite his repeated requests for a hearing.5. Discretion of Reward Granting Authority:The court noted that the reward scheme is an ex gratia payment subject to the discretion of the competent authority. The guidelines specify that rewards are not a matter of right and are determined based on the specificity and accuracy of the information, the risk undertaken, and the extent of help rendered by the informer. The court emphasized that the department’s assessment of the petitioner’s claim, which found his information to be insufficient and already under investigation, was not liable to be interfered with in writ jurisdiction.Conclusion:The court dismissed the petition, finding that the petitioner’s claim for a reward was rightly negatived. It held that the petitioner’s information was not the basis for the investigation and that the department had acted on its own intelligence. The court also noted that the petitioner’s entitlement to a reward was not consistent with the policy or guidelines and that there was a clear factual dispute regarding the source and usefulness of the information provided. The court concluded that it could not probe such matters in writ jurisdiction, as it would require compromising the confidentiality of the department’s intelligence-gathering processes.