Extended limitation for exemption denial fails when department already had knowledge and no notice followed within one year

Extended period of limitation could not be invoked for denial of exemption under Notification No. 49-50/2003-CE where the assessee began availing the exemption earlier but the relevant declaration was filed and the department acquired knowledge only on 30/04/2009. Limitation was treated as running from the date of departmental knowledge, so a notice issued beyond one year from that date was time-barred. The cited precedent was distinguished because it involved earlier investigation and prior correspondence with the department. The denial of exemption was therefore set aside.

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Issues: Whether the extended period of limitation could be invoked for denial of exemption under Notification No.49-50/2003-CE dated 10/06/2003 for the period 06/06/2007 to 29/04/2009.

Analysis: The appellant had started availing the exemption from 06/06/2007, though the proper declaration was filed only on 30/04/2009. The relevant fact was made known to the department on 30/04/2009. In such circumstances, limitation was held to run from the date the department acquired knowledge of the exemption claim. Since no show-cause notice was issued within one year from that date, invocation of the extended period was held to be unsustainable. The cited precedent was found distinguishable on its facts because, in that case, the investigation had commenced much earlier and the assessee had been corresponding with the department.

Conclusion: The extended period of limitation was not invocable and the show-cause notice was time-barred; the denial of exemption was set aside.

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