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TMI BlogGRANTING REWARD IS AN EX-GRATIA PAYMENT BUT NOT A MATTER OF RIGHT.X X X X Extracts X X X X X X X X Extracts X X X X ..... GRANTING REWARD IS AN EX-GRATIA PAYMENT BUT NOT A MATTER OF RIGHT. - By: - Mr. M. GOVINDARAJAN - Other Topics - Dated:- 25-5-2012 - - An informer who gives information to the Department in respect of evasion of duty is given reward for his information given to the Department. The Government of India has formulated guidelines on 20.06.2001 regarding the grant of reward to the informers and Government servants. These guidelines were modified on 16.04.2004. Under these guidelines certain rewards up to 20% of the net sale proceeds of contraband goods seized and/or the amount of duty evaded and the amount of fine or penalty levied and recovered can be granted. We may see some of the important provisions under thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e guidelines in the coming paras. Clause 5.1 of the guidelines provided that a reward is purely an ex-gratia payment which, subject to the guidelines, may be granted on the absolute discretion of the authority competent to grant rewards. Such rewards cannot be claimed as a matter of right. In determining the reward authority will keep in mind- the specificity and accuracy of the information; the risk and trouble undertaken, the extent and nature of the help rendered by the informer whether information gives clues to persons involved in smuggling, or other associates etc.,; the risk involved for the Government servants in working out the case; the difficulty in securing the information; the extent to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the vigilance of the staff led to the seizure, special initiative, efforts and ingenuity displayed etc.,; and whether, besides the seizure of contraband goods, the owners/organizers/financiers/racketeers as well as the carriers have been apprehended or not. Clause 6.1 of the guidelines provide that an advance or interim award may be paid to informers and to Government servants up to 50% of the total admissible reward, immediately on seizure, in respect of the following: gold/silver bullion; arms and ammunition, explosives, and opium and other narcotic drugs. In other cases of outright smuggling, involving seizures of contraband goods, including foreign currency, advance/interim reward, according to guideline 6.2, up t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 25% of the total admissible reward may be paid to informers and government servants, immediately after seizure, if the authority competent to sanction a reward is satisfied that the goods seized are reasonably expected to be confiscated on adjudication and the order of adjudication is likely to be sustained in appeal or revision. Clause 6.3 provides that in all other cases, including customs appraising cases, no advance/interim award will be granted. In cases where the parties have voluntarily paid the amount of duty evaded during the course of investigation, admitting their liability 25% of the voluntary deposits may be considered for payment as advance/interim reward to the informers. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Clause 7.1 provides that final rewards both to officers as well as informers can be sanctioned and disbursed only after conclusion of adjudication/appeal/revision proceedings. Clause 8 provides for a delegation of powers for sanctioning and payment of rewards. This power is delegated to committees separately specified depending upon the monetary limit involved in the case. Clause 9 provides that a final reward sanctioned by the duly constituted authority or committee shall not be reviewed or reopened. However in exceptional cases, where DGRI, DGCEI or the Chief Commissioner is satisfied that review of the final reward sanctioned by the competent authority is absolutely necessary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redress any grave injustice meted out to the informer/Government servant, the Government may review the final reward sanctioned on the specified recommendations of the Board. From the provisions of the guidelines it is clear that the reward is an ex-gratia payment payable to the informer/Government servant purely on the discretion of the Committee constituted for this purpose. It cannot be claimed as a matter of right. This has been confirmed by the Supreme Court in Union of India V. Krishna Reddy ( 2003 (12) TMI 55 (SC) ). In this case the Supreme Court held that a reward is an ex-gratia which is subject to guidelines and is granted on the absolute discretion of the competent authority and cannot be cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed as a matter of right. The High Court cannot in writ jurisdiction cannot examine or weigh the various factors which have to be taken into consideration, while deciding a claim regarding grant of reward. These are matters exclusively within the domain of the authorities of the Department as they alone can weigh and examine the usefulness or otherwise of the information given by the informer. Thus the power of the competent authority in granting reward cannot be questioned by the High Court in writ jurisdiction. The Bombay High Court XYZ V. Union of India 2011 (9) TMI 784 (HC) also held that the High Court in the proceedings under Article 226 of the Constitution cannot grant the relief which is soug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht which is that the respondents should be directed to pay to the petitioner a reward representing 20% of the value of the recoveries made on the basis of the guidelines. The fact of the case runs as follows: The petitioner is the informer. He furnished information to the officers of DRI at Mumbai that a company forming a part of the More Group of companies obtained advance licences and imported products and had evaded customs duty by under invoicing the imports and by acting upon forged documents. The DRI arrested a director of one of the entities and recovered an amount of Rs.22.8 crores towards duty liability. The petitioner claimed a reward representing 20% of the value of the goods confiscated and duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recovered. The petitioner addressed many a time to which there was no reply either from the Additional Director General of the DRI at Mumbai or at Ahmadabad. An Advocate s notice was also issued. Since there was no response the petitioner filed this writ petition before the High Court. In the reply affidavit filed by the Department various occasions involved in this case had been elaborated indicated. Finally it has been stated that the CESTAT had by an order remanded the proceedings in appeal. The affidavit also records that the final status of the appeal is not known to the department. The petition contended that his claim had not even been placed for consideration before the Committee which is duly con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stituted by the guidelines. The High Court held that grant of a reward is not a matter of right. However the High Court found a considerable degree of substance in the grievance of the petitioner that the case of the petitioner has not even been considered by the Committee. The High Court also found that the petitioner had continuously addressed communications to the Department. None of the communications has elicited a reply. The High Court was of the view that the claim of the petitioner should be considered by the Committee. The High Court clarified that they had not expressed any view on the role of the petitioner or about the nature of the information that is alleged to have been disclosed by the petitioner. These are the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which have to be determined by the Committee in the light of the guidelines. The High Court also clarified that they were not directing the grant of a reward. - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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