Clubbing of clearances and extended limitation fail where allegations are inconsistent, facts are unproven, and suppression is not established.

Clearances of two units cannot be clubbed where the notice relies on mutually inconsistent allegations and the factual foundation is unsupported; the demand on merits is therefore unsustainable. The note also explains that limitation and penalty provisions cannot be invoked where the adjudicating order is internally inconsistent on intent, the department already knew the material facts from earlier proceedings, and deliberate suppression is not established. The appellate relief is described as succeeding on both merits and limitation, with the lower orders set aside.

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Issues: (i) whether the clearances of the two units could be clubbed and the demand sustained on merits; (ii) whether the demand and penalties were barred by limitation and the penal provisions were attracted.

Issue (i): whether the clearances of the two units could be clubbed and the demand sustained on merits.

Analysis: The notice proceeded on mutually inconsistent bases, alleging both that the units were one and the same and, alternatively, that even if they were separate units in the same premises their clearances had to be clubbed under the notification. The findings of the lower authorities also did not rest on a consistent factual foundation. The record showed that separate ground plans had been filed and approved after verification, and no adequate reason was given for rejecting that approval or for concluding that the units were operating from the same premises in the manner alleged.

Conclusion: The demand was not sustainable on merits.

Issue (ii): whether the demand and penalties were barred by limitation and the penal provisions were attracted.

Analysis: The order of the adjudicating authority itself reflected uncertainty by referring to both negligence and deliberate intention to evade duty in the same breath. In such circumstances, the foundation required for invoking the penal consequences did not stand established. Further, the department had already been aware of the material facts through earlier proceedings on the same grounds, so the invocation of suppression and the extended period was not justified.

Conclusion: The demand and penalties were barred by limitation and the penal provision was not attracted.

Final Conclusion: The appellate relief succeeded on both merits and limitation, and the impugned orders of the lower authorities were set aside.

Ratio Decidendi: A demand based on mutually inconsistent allegations and unsupported factual findings cannot be sustained, and the extended limitation period or penalty provisions cannot be invoked where the department was already aware of the relevant facts and deliberate suppression is not established.

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