Extended limitation cannot sustain credit denial where Revenue holds divergent views on the same entitlement issue.

Where the Revenue itself has taken divergent views on the entitlement to credit under the Jammu and Kashmir exemption regime, and similarly placed assessees have already been granted relief, invocation of the extended period of limitation is unsustainable. The article states that in such circumstances the show cause notice cannot validly rest on extended limitation, and the limitation objection becomes decisive without reaching the merits of the credit claim. Accordingly, denial of credit was treated as barred by limitation because the extended period could not be applied on the facts described.

---

---

Issues: Whether denial of credit was barred by limitation because the show cause notice was issued by invoking the extended period, despite divergent views of the Revenue on the same issue.

Analysis: The dispute concerned availment of credit during the relevant period under the exemption regime applicable to units in Jammu & Kashmir. The record showed that similarly placed assessees had been allowed the credit and the Revenue had challenged those orders, indicating divergent departmental views on the entitlement issue. In such a situation, invocation of the extended period of limitation was held to be unsustainable. Since the notice itself rested on the extended period, the limitation objection was decisive and it was unnecessary to enter into the substantive merits of the credit claim.

Conclusion: The extended period of limitation was not applicable and the denial of credit was barred by limitation.

Ratio Decidendi: Where the Revenue holds divergent views on an issue and similarly placed assessees have been granted relief, extended limitation cannot be invoked to sustain a demand.

---