X Vs. DIRECTOR GENERAL DGCEMUMBAI ZONE UNIT

JUDGEMENT

(1.) The Petitioner has in these proceedings under Article 226 of the Constitution sought a direction to the Respondents to release a reward which he claims to be due to him under a scheme of the Union Government in the Ministry of Finance, Department of Revenue issued on 20 June 2001. The Petitioner has moved these proceedings stating that he has submitted information to the Director General of Central Excise Intelligence (DGCEI) pointing out a case of service tax evasion by a company by the name of Punj Lloyd Ltd. According to the Petitioner on receipt of that information supplied by him, a notice to show cause was issued and an amount of Rs.11.33 Crores was recovered by the Government during the course of the investigation in 2005 06. However, though the recovery was made in 2006, the reward which is due to him has not been paid and it is on this basis that the Petitioner has moved this Court under Article 226.

(2.) An affidavit in reply has been filed in these proceedings by the Assistant Director working in the office of the DGCEI. The affidavit states that the department did receive information to the effect that Punj Lloyd Ltd. had constructed a pipeline for ONGC at the JNPT Terminal, New Mumbai. An informer informed the department that though the amount was paid by ONGC to Punj Lloyd Ltd, service tax dues to the extent of Rs.80 Crores were not paid. A notice to show cause was issued on 19 December 2007 to Punj Lloyd Ltd. stating that it had provided taxable services under the category of "commercial or industrial construction services" and the company was liable to pay service tax dues under the Finance Act, 1994. During the course of the investigation the company paid a sum of Rs.10.80 Crores as service tax and an amount of Rs.52.59 lacs as interest. However, according to the department, Punj Lloyd replied to the notice to show cause and contended that service tax was made applicable to the laying of a pipeline project with effect from May 2005 whereas the price bid was submitted prior to that date and the job was awarded on 13 June 2005. The Commissioner by his order dated 26 February 2009 confirmed the demand of service tax in the amount of Rs.10.80 Crores and imposed a penalty in the like amount. The assessee filed an appeal in May 2009 before the CESTAT (Delhi Bench) which is pending. In that appeal, it has been contended that the assessee became classifiable under the new taxable category of execution of works contract service only with effect from 1 June 2007 and that no service tax was payable during the relevant period of time. On this ground, it has been urged that unless the order passed by the Commissioner of Central Excise (Adjudication) is confirmed in appeal and attains finality, the quantum of the reward cannot be calculated and may not even become payable. Hence, according to the department unless finality is reached, the reward would not be payable and the proposal of the informer would be taken up immediately once that stage has been attained.

(3.) The guidelines for the grant of rewards were initially issued under a circular dated 20 June 2001 of the Union Ministry of Finance. Subsequently by a further circular dated 16 April 2004 the guidelines have been made inter alia applicable in regard to information provided by informers and government servants in regard to the evasion of service tax dues. Under the earlier circular and as amended subsequently, committees have been constituted for considering the sanction of rewards to informers and government servants. The jurisdiction of each committee is circumscribed by monetary limits.