Debatable valuation issue defeats suppression claim and bars extended limitation for free-supplied packing machinery cost inclusion.

A demand involving inclusion of the amortised value of free-supplied packing machinery in assessable value was held time-barred because the underlying valuation issue was debatable during the relevant period. The text notes that a then-prevailing decision supported the assessee and that the point was only later settled by a Larger Bench. On that basis, non-inclusion of the amortised value was not treated as suppression of facts with intent to evade duty, so the extended period of limitation was inapplicable.

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Issues: Whether the demand was barred by limitation and the extended period could be invoked on the ground of suppression of facts, in a dispute concerning inclusion of the amortized value of a packing machine supplied free of cost in the assessable value.

Analysis: The issue of includibility of the cost of free-supplied packing machinery was not settled during the relevant period and was subject to differing views until it was resolved by a Larger Bench. During the period of demand, a then-prevailing decision had taken a view favourable to the assessee, showing that the legal position was debatable. In such a situation, the mere non-inclusion of the amortized value could not be treated as suppression of facts with intent to evade duty. The demand, therefore, could not be sustained by invoking the extended period of limitation.

Conclusion: The demand was held to be time-barred and the extended period was held to be inapplicable; the assessee succeeded on limitation.

Ratio Decidendi: Where the liability turns on a debatable interpretation of law and the issue is later settled by a Larger Bench, non-payment on the then-prevailing understanding does not amount to suppression of facts with intent to evade duty for invoking the extended period.

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