Extended limitation requires wilful suppression; disclosed credit reversals prevented the tax demand from being sustained.

Extended limitation was unavailable because the assessee had disclosed the manner of credit availment and reversal through letters to the department and in periodic returns. The lower authorities did not address these disclosures, and the show cause notice contained no positive material showing wilful suppression of facts with intent to evade tax. On that basis, the demand was held unsustainable on limitation and was set aside.

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Issues: Whether the demand was barred by limitation and whether the extended period could be invoked in the absence of wilful suppression of facts.

Analysis: The appellant had disclosed the manner of availment and reversal of credit through letters addressed to the department and through periodical returns. The lower authorities did not deal with these disclosures. No positive material was brought in the show cause notice to establish wilful suppression of facts with intent to evade tax. In these circumstances, the extended period of limitation was not available.

Conclusion: The demand was held to be unsustainable on limitation and was set aside.

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