“It is not a healthy practice to keep the investigation pending till eternity and keep the sword handing over the heads of the petitioners”
The Madhya Pradesh High Court quashed the prosecution case in absence of prima facie evidence on alleged “Dabba Trading” GST and Income Tax Evasion.
According to the investigator, some persons indulged in unauthorized ‘Forward Trading’ or ‘Dabba Trading’ outside the portal of MCX by using ‘Meta Trade-5’ software. This software was developed and owned by Meta Quotes Inc.
It had been alleged that the petitioners earned crores of Rupees in profit towards the brokerage for the trading on the MT-5 software. However, there is no such document to prove this. SEBI the nodal agency to prosecute such crimes did not initiate any inquiry on any of the accused persons. The alleged profit earned on this dummy software did not reflect on the books of accounts of the petitioner.
Even after intimation given by the investigator, the income tax authorities did not initiate any inquiry on the alleged profit earned. The GST authority had passed an order to recover a penalty of rupees 24 lacs on the basis of a notional figure. This penalty was quashed by the CGST and Central Excise and Customs and remitted the matter back for reconsideration.
The Court of Justice Virender Singh observed that “When there is no evidence to show that any device, mobile phone, or server having MT-5 software belongs to the petitioners, when the seizure of the server manifestly violets the procedure prescribed by law, when the procedure to retrieve data from the server is not in conformity with the law and creates doubt, when the data provided for analysis is itself unreliable, then all reports based upon such data, which has been heavily relied upon by the prosecution are liable to be rejected at the threshold especially when the prosecution has nothing to say against an allegation of bias, arbitrariness, hi handedness and also against the conduct of the investigators.”
The Court also noted that no damage was caused to any computer, computer system or computer network etc. without permission of the owner or in charge of such computer or computer system or that any data stored in the computer was altered, destroyed or tampered with or that any offensive messages were sent to any person by means of a computer resource or a communication device or that there was some misrepresentation or suppression of any material fact from the Controller or the Certifying Authority for obtaining any licence or Electronic Signature Certificate, therefore, the alleged sections also do not attract in this case.
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