Limitation bars interest demand on supplementary invoice collections where prior judicial views supported a bona fide belief against liability.

Interest demanded on additional consideration collected through supplementary invoices after price escalation was held time-barred. The dispute turned on limitation, with the assessee showing a bona fide belief that no interest was payable while earlier Tribunal and High Court views remained in its favour. Once the legal position was later clarified against the assessee, the prior contrary judicial support was treated as relevant to the limitation defence. The interest demand was therefore set aside as barred by limitation, while the assessee succeeded on that issue.

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Issues: Whether the demand of interest on additional amounts collected through supplementary invoices, arising from price escalation under the original contracts, was barred by limitation.

Analysis: The dispute concerned liability to pay interest on the additional consideration collected after price escalation. The underlying liability had been settled against the assessee by the Supreme Court, but the assessee contended that, until that clarification, it had a bona fide belief based on earlier Tribunal and High Court decisions that no interest was payable. On that basis, the notice demanding interest for the relevant period was challenged as time-barred.

Conclusion: The demand of interest was held to be time-barred, and the assessee succeeded on the limitation issue.

Final Conclusion: The appeal was allowed on merits, but the interest demand was set aside as barred by limitation.

Ratio Decidendi: Where a levy is raised after the legal position has been clarified against the assessee, prior contrary judicial views may support a bona fide belief that can render the demand time-barred.

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