A recent Supreme Court case has brought attention to the issue of rewarding whistleblowers appropriately, with India's prominent video news agency, ANI, at the center of the controversy surrounding tax evasion. The apex court directed the Ministry of Finance to reevaluate the amount of reward to be given to an individual who provided information about ANI's alleged tax evasion.
The whistleblower approached the Supreme Court, expressing dissatisfaction with the reward granted by the finance ministry despite the accuracy of the information provided, which led ANI to clear its tax dues. The appellant revealed that he had informed the tax authorities about ANI's outstanding service tax dues, amounting to approximately Rs 2.59 crore.
Upon receiving the information, the tax authorities sent a non-compliance notice to ANI, which ultimately resulted in the news agency clearing its pending taxes. However, the whistleblower contended that he received only Rs 5.50 lakhs as a reward, whereas he believed he was entitled to Rs 51.80 lakhs, as per clause 4.1 of the "Reward to Informers" policy issued by the revenue department of the Union Finance Ministry.
Clause 4.1 of the policy stipulates that whistleblowers can receive up to 20% of the amount of tax evaded and the fines and penalties imposed on the defaulters. Dissatisfied with the outcome, the appellant first approached the Bombay High Court in 2015, but the court ruled against him. Subsequently, he sought relief from the Supreme Court.
The Supreme Court criticized the reward committee for its lack of reasoning while granting the award. Justices Abhay S. Oka and Justice Sanjay Karol, constituting the bench, observed that there was a complete non-application of mind in assessing the appellant's reward. They directed the finance ministry to reevaluate the amount to be given to the informant based on well-founded reasons.
Notably, in 2018, the Additional Solicitor General had increased the reward money to Rs 9.45 lakhs without providing any explicit justification. The court deemed this decision arbitrary and reflective of the reward committee's non-application of mind.
In response to the news, ANI issued a statement defending itself against allegations of tax evasion. The news agency clarified that it had voluntarily and promptly paid the deficient service tax in 2010, as demanded by the appropriate authorities. ANI asserted that it complies fully with all applicable laws and has no outstanding tax demand.
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