Extended limitation for suppression fails where CENVAT credit disclosures were made and no intent to evade tax was shown.

The extended limitation period under the proviso to Section 73(1) of the Finance Act, 1994 was not available where the assessee had disclosed CENVAT credit in ST-3 returns and the Department had examined the relevant records before the show cause notice. Mere availment of credit, even if later found inadmissible, did not by itself amount to suppression of facts. Suppression for extended limitation required deliberate concealment with intent to evade tax, and no such positive act or intent was shown. A bona fide dispute on credit entitlement and no duty to disclose beyond the return format further negatived invocation of the extended period, so the demand, penalty and interest based on the barred notice could not be sustained.

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Issues: Whether the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994 could be invoked to sustain the demand and recovery of disallowed CENVAT credit.

Analysis: The appellant had disclosed the CENVAT credit availed on inputs, input services and capital goods in the ST-3 returns. The audit had also examined the relevant records and the Department was aware of the material facts well before issuance of the show cause notice. Mere availment of credit, even if later considered inadmissible, did not by itself establish suppression of facts. For the extended period to apply, suppression must be deliberate and accompanied by intent to evade payment of tax. The record did not show any positive act of concealment or any material indicating such intent. A bona fide dispute on entitlement to credit and the absence of any statutory duty to disclose particulars beyond the return format also negatived the plea of suppression.

Conclusion: The extended period of limitation was not invocable. The demand, penalty and interest based on the barred notice could not be sustained, and the appeal succeeded in favour of the assessee.

Ratio Decidendi: Suppression of facts for the purpose of the extended limitation period must be deliberate and must be accompanied by intent to evade tax; where the relevant facts are disclosed in returns and are known to the Department, the extended period under the proviso to Section 73(1) of the Finance Act, 1994 cannot be invoked.

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