Revenue neutrality and voluntary tax payment can defeat extended limitation and related penalty where no intent to evade is shown.

Voluntary payment of duty with interest can negate allegations of suppression or intent to evade where the tax was otherwise available as credit, supporting a plea of revenue neutrality. On the stated facts, the assessee's payment in 2013 and the department's later credit treatment showed no real tax advantage from the alleged non-payment, so the ingredients for the extended period of limitation were not established. The result was that the extended limitation period was not sustainable, and the connected penalty also fell away.

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Issues: Whether invocation of the extended period of limitation and consequent penalty was sustainable in view of the assessee's voluntary payment of tax with interest and the claimed revenue neutrality.

Analysis: The duty was paid by the assessee in 2013 with interest, which indicated absence of intent to evade duty. The tax paid was available as credit in law, so no real tax advantage accrued from the alleged non-payment. The subsequent credit treatment by the department reinforced the position that the demand was not based on an enforcement action and that revenue neutrality existed. In these circumstances, the delay stood neutralised by payment of interest and the ingredients for invoking the extended period were not made out.

Conclusion: The extended period of limitation was wrongly invoked and the assessee was entitled to relief on limitation as well as on penalty.

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