No Vested Right for Informer to Challenge Tax Adjudication Merely for Reward: Delhi High Court Flags Maintainability in GST Case

“The grant of an award or a reward to an informer is a discretionary grant… the petitioner is not entitled to challenge the order-in-appeal since the status of the petitioner is that of an informer.” - Delhi High Court addressed the fundamental question of whether an informer under the CBEC Reward Scheme, 2015 can maintain a writ petition under Article 226 of the Constitution to challenge an appellate tax adjudication order merely on the ground that it affects the quantum of reward due to them.

Observing that “no right can be claimed by an individual to be given an award or a reward”, the Court made it clear that such a reward is discretionary, and an informer cannot claim enforceable legal standing to challenge GST/excise adjudication on merits.

“Informer Has No Locus to Assail Merits of Tax Order Just to Enhance Reward” – Court Refers to Krishna Reddy Case

The petitioner, identified only as XY, approached the Court claiming entitlement to reward under the CBEC Notification dated 31 July 2015 issued by the Anti-Smuggling Unit of the Central Board of Excise and Customs (CBEC). The petitioner had provided information on alleged tax evasion by M/s Shakti Enterprises, which had triggered a departmental proceeding resulting in a Show Cause Notice (SCN) dated 28 July 2023, and culminated in an Order-in-Original dated 6 December 2023, imposing substantial tax demands and penalties.

However, upon appeal, the Commissioner (Appeals) modified the outcome in the Order-in-Appeal dated 15 July 2024, setting aside penalties and reducing tax liability. The informer, aggrieved by the reduction in the final demand, approached the High Court seeking judicial review, claiming the lowered tax dues adversely impacted the quantum of reward owed to them.

The Court, however, questioned the very maintainability of such a writ petition, and cited the Supreme Court’s decision in Union of India v. C. Krishna Reddy, (2003) 12 SCC 627, where it was held that:

“The grant of reward is purely an act of grace or bounty governed by administrative guidelines which do not confer any legal right upon an informer.”

Reiterating this legal position, the Delhi High Court remarked:

“Such a person cannot create a lis on the ground of claiming of an award and contest the private respondent on merits.”

Dispute on Reward Quantum Following Modified Tax Order

The central factual dispute stemmed from the petitioner’s contention that the Department had erroneously computed taxable value, particularly by not accounting for several clients of M/s Shakti Enterprises who had allegedly deposited TDS, thereby resulting in an artificially reduced demand figure in the appellate order.

While the petitioner sought to challenge the merits of the appellate tax adjudication on this basis—arguing it affected the quantum of the reward under the CBEC Reward Scheme—the Court clarified that an informer has no enforceable right to seek judicial correction of tax adjudications through writ jurisdiction for reward-related grievances.

On behalf of the Union of India, the counsel relied on the C. Krishna Reddy precedent to oppose the maintainability of the petition, asserting that the reward is an ex gratia discretionary scheme, not one that creates a legally enforceable entitlement.

Court Directs Arguments on Maintainability; Petitioner’s Identity Filed in Sealed Cover

The Court did not pass any interim relief but directed the matter to be listed for a detailed hearing on the issue of maintainability on December 18, 2025. It ordered that the petitioner—informer—must remain present in person on the next date.

Interestingly, in view of privacy and sensitivity surrounding the identity of informers under such schemes, the petitioner’s notarised affidavit with personal particulars was submitted in a sealed cover, which the Court directed the Registry to retain confidentially.

The Court concluded: “Let the learned counsel for the parties be ready to address the issue of maintainability of the petition.”

The Delhi High Court’s interim order raises critical concerns regarding the judicial limitations on informers seeking rewards under government schemes such as the CBEC Reward Scheme, 2015. While acknowledging the petitioner’s contribution to initiating enforcement action, the Court firmly underscored the discretionary nature of the reward, denying any locus standi to challenge adjudicatory orders merely to enhance or preserve a potential reward amount.

The matter will now be substantively argued on the question of maintainability on December 18, 2025, and unless the Court finds an exception or special circumstance, the case is likely to reinforce the precedent that informers are not parties to tax adjudication and cannot invoke constitutional remedies to protect a discretionary bounty.

Date of Decision: October 9, 2025