Extended limitation unavailable where credit was disclosed in returns and the dispute emerged only in a later audit, stay granted.

Where credit was disclosed in regular returns and earlier audits raised no objection, the subsequent detection of the dispute in a later audit made the extended limitation period prima facie unavailable. On that basis, the Tribunal found the demand vulnerable on limitation and granted stay against recovery of the confirmed dues and penalty pending disposal of the appeal. The interim relief was therefore allowed because the appellant showed a prima facie case that the recovery was time-barred.

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Issues: Whether the appellant had made out a prima facie case for stay and waiver of recovery in respect of the demand alleged to be time-barred on account of invocation of the extended period after subsequent audit.

Analysis: The appellant had filed periodical returns and the credit position had been examined in earlier audits without objection. The disputed issue surfaced only in later audits. On these facts, and following the cited view that the proviso for extended limitation is not attracted when the alleged irregularity is noticed only in a subsequent audit despite prompt returns, the demand was regarded as prima facie vulnerable on limitation. The Tribunal therefore found sufficient basis to protect the appellant from recovery pending disposal of the appeal.

Conclusion: The appellant's plea on limitation was accepted at the prima facie stage, and stay against recovery of the confirmed dues and penalty was granted.

Final Conclusion: Recovery of the confirmed demand and penalty was stayed pending disposal of the appeal, with the appellant obtaining interim relief on the limitation issue.

Ratio Decidendi: Where credit is reflected in regular returns and the dispute is detected only in a subsequent audit, the extended period is not prima facie available for recovery purposes.

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