Disclosure of operational storage losses defeated extended limitation where no suppression or clandestine removal was proved.

Operational storage losses disclosed in statutory RT-12 and ER-1 returns did not justify the extended period of limitation where the department had notice of the losses and produced no evidence of clandestine removal, pilferage, or any wilful act to evade duty. The genuine nature of the losses, arising from the characteristics of petroleum products, meant that suppression of facts was not established. As a result, invocation of the extended period was unwarranted and the duty demand, interest, and penalty could not be sustained; the order dropping the proceedings was affirmed.

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Issues: Whether the duty demand, interest and penalty could be sustained by invoking the extended period of limitation on the allegation of suppression of facts in respect of operational storage losses.

Analysis: The respondent had disclosed the operational losses in its monthly RT-12 returns and ER-1 returns, and the department had notice of the same. The record did not show any clandestine removal, pilferage, or wilful act intended to evade duty. The loss was treated as genuine storage loss arising from the nature of petroleum products, and the department had not established any deliberate omission. On these facts, suppression of facts was not made out, and invocation of the extended period was unwarranted.

Conclusion: The extended period of limitation was not invocable, and the duty demand, interest and penalty could not be sustained.

Final Conclusion: The appeal failed and the order dropping the proceedings was affirmed.

Ratio Decidendi: Where operational losses are disclosed in the statutory returns and there is no evidence of clandestine removal or deliberate suppression, the extended period of limitation cannot be invoked.

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