After a prolonged legal battle lasting over a decade, the Bombay High Court (HC) has directed the Maharashtra government to immediately pay Rs19.44 lakh to Darshan Singh Parmar, a whistle-blower who exposed large-scale tax evasion by public sector oil companies. In a strongly worded judgement, the Court directed that Rs19.44 lakh be paid within six weeks to Mr Parmar, failing which interest at 8%pa (per annum) will be recovered from the officers responsible for the delay.
Delivering the judgement, the bench of justice MS Sonak and justice Jitendra Jain observed that the authorities do not wish to comply with their own circulars or resolutions, despite acknowledging Mr Parmar’s contributions to tax recovery. "The sales tax commissioner and the finance secretary, State of Maharashtra, must, within six months from today, determine the precise amount of rewards payable to Mr Parmar and, upon such determination, pay the reward amount to him within two months. The sales tax commissioner and the finance secretary must supply Mr Parmar with full particulars of the recoveries made and the status of pending appeals and hear him and consider all the documents produced by him."
"The sales tax commissioner and the finance secretary must also examine all records, as we have noted that full particulars are not being supplied to either Mr Parmar or this Court, but rather to delay the payment of the reward to the petitioner. If the government has formulated a reward scheme, it must be implemented fairly and transparently. Informers who take risks and invest time must not be made to run from pillar to post to secure what may be due and payable. There must be no unreasonable delay in paying the determined reward amounts, and the practice of raising frivolous and belated objections only to avoid legitimate payments must also be eschewed," the HC says.
Mr Parmar, now a 76-year-old resident of Chembur in Mumbai, began providing information to the sales tax department as early as in 1992, highlighting fraudulent practices between oil companies and certain fishing cooperative societies. Although the government initially took no action, his persistence led to an inquiry by the central bureau of investigation (CBI), arrests and eventually tax recoveries of over Rs12.93 crore through the 2019 amnesty scheme.
Despite multiple Court orders since 2013, the sales tax department and state finance ministry consistently failed to determine and pay the reward. They argued the reward was contingent on 'irrevocable recovery' of dues and later cited procedural technicalities, including Mr Parmar’s supposed failure to submit information in the required Form-A—an allegation dismissed by the HC as factually incorrect and raised too late.
The HC, in its detailed ruling, noted that as early as 2015, the sales tax department had internally acknowledged that a reward amount was due to Mr Parmar. However, excuses ranging from pending appeals, lack of government sanction and, later, an allegation that the whistle-blower did not submit information in the prescribed Form-A were cited to avoid payment.
The Court found these defences unsatisfactory and at times false, pointing out that the Form-A had in fact been submitted and was part of the petition documents. Moreover, this objection was never raised in earlier affidavits and appeared to be a last-minute ploy to obstruct payment.
The bench observed that the joint commissioner of state tax, with the commissioner’s approval, had clearly communicated in October 2024 that an amount of Rs19,44,802 was admissible to Mr Parmar as per the government's own reward scheme.
The High Court took serious exception to the subsequent denial of payment, despite this formal determination, stating that the government must honour its own schemes in a fair and transparent manner. It warned that delays in compensating genuine informants would discourage public participation in exposing tax fraud, and in turn, harm the revenue collection process.
The Court observed that the reward scheme was not intended to be an empty promise and called out the 'lethargy' of the officers involved. It held that if payment is not made within six weeks, interest shall be paid by the government but recovered from the concerned officials after an internal inquiry conducted by the finance secretary.
The judgement also directed the sales tax commissioner and finance secretary to finalise Mr Parmar’s full entitlement within six months, based on all recoveries and pending appeals, and to furnish him with all relevant records.
Although the government had determined Rs19.44 lakh as the reward based on the Rs12.93 crore irrevocable tax recovery, Mr Parmar has contended that the actual amount should be much higher. The Court allowed him to accept the amount under protest and granted him liberty to pursue legal remedies for the remaining claims.
In a final rebuke, the bench remarked that such treatment of informants was unacceptable and that the practice of raising belated, frivolous objections to avoid legitimate payments must end. The judgement is expected to have wider implications for the implementation of reward schemes across government departments, particularly in ensuring timely recognition and remuneration of whistle-blowers.
(Writ Petition No2283 of 2013 Date: 24 June 2025)
