Extended Limitation Cannot Rest on Suppression When Department Already Knew the Facts, Second Notice Fails

A second show cause notice on the same facts and for the same period could not be sustained by alleging suppression of facts where an earlier notice had already initiated the dispute and the department was aware of the relevant facts. Issuance by the correct jurisdictional authority did not create a fresh basis to invoke the extended period of limitation. The notice was therefore barred by limitation, and the confirmed demand and penalty were set aside in favour of the assessee.

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Issues: Whether the second show cause notice issued on the same facts and for the same period, after an earlier notice on the same dispute had been issued and set aside on jurisdictional grounds, could sustain by invoking suppression of facts and the extended period of limitation.

Analysis: The dispute had already been initiated by an earlier show cause notice covering the same period and the same alleged duty liability. The later notice was founded on the very same facts, with the only change being issuance by the correct jurisdictional authority. On these facts, the element of suppression could not be invoked merely to justify a fresh notice and extend limitation. The governing principle is that where the department was already aware of the relevant facts, a second notice on the same basis cannot be sustained by alleging suppression only to overcome limitation.

Conclusion: The second show cause notice was barred by limitation and the demand and penalty confirmed under it were set aside in favour of the assessee.

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