Extended Limitation Period requires specific averments; absent them, demand for tax, interest and penalties rejected.

The tribunal addressed whether the extended limitation period under the proviso could be invoked and whether attendant interest and penalties were sustainable. It applied the legal principle that invocation of the extended period requires specific averments that tax was unpaid by reason of fraud, collusion, wilful misstatement or suppression with intent to evade, and noted statutory protection where tax and interest have been paid and information furnished before a notice. Finding the show cause notice lacked the mandatory specific averments, the appellant had paid tax and interest pre-notice, and revenue failed to rebut explanations, the extended-period demand and related interest and penalties were set aside.

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Issues: Whether the demand invoking the extended period of limitation under the proviso to Section 73 and the attendant demand of interest and penalties were tenable.

Analysis: The Tribunal examined Apex Court pronouncements establishing that invocation of the extended period requires specific averments in the show cause notice that duty/tax was not levied or paid by reason of fraud, collusion, wilful misstatement or suppression of fact or contravention with intent to evade payment. The Tribunal noted the statutory protection in Section 73(3) of the Finance Act, 1994 that, where tax and interest have been paid and information furnished before issuance of a notice, no notice should be served in respect of the amount so paid. Applying these principles to the facts, the Tribunal found that the SCN did not allege intent to evade, fraud, collusion or wilful suppression, and that the appellant had, before issuance of the SCN, paid the tax and interest claimed by the audit; further, Revenue produced no evidence rebutting the appellant's plausible explanation. The Tribunal also relied on precedents holding that mere non-payment does not automatically amount to the proviso grounds and that extended period cannot be invoked without the mandatory specific averments.

Conclusion: The demand invoking the extended period of limitation and the consequential interest and penalties are untenable and set aside; the appeal is allowed in favour of the assessee.

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