Extended limitation and CENVAT credit denial fail where bona fide conduct and record evidence defeat suppression and delay objections.

Extended limitation could not be invoked where the taxpayer had commenced taxable activity, availed and used input service credit, and sought GST migration, because the record showed bona fide conduct rather than suppression; the show cause notice was therefore time-barred and the demand could not survive. CENVAT credit also could not be denied on the ground of delayed availment, because the Tribunal found that the credit had been taken and used within the relevant period and the objection was factually unsupported on the record. The impugned order was set aside with consequential relief.

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Issues: (i) whether the extended period of limitation could be invoked and the show cause notice was time-barred; (ii) whether CENVAT credit could be denied on the ground of delayed availment.

Issue (i): whether the extended period of limitation could be invoked and the show cause notice was time-barred.

Analysis: The appellant had commenced taxable activity, availed input services, utilised the credit for payment of service tax, and had also approached the Department for migration to GST. The record showed that the registration had been suo motu cancelled and the appellant could not file ST-3 returns on that account. In these circumstances, the conduct disclosed bona fides rather than suppression. The Department also remained inactive for a substantial period before issuing the notice.

Conclusion: The extended period of limitation was not invocable and the show cause notice was barred by limitation, in favour of the assessee.

Issue (ii): whether CENVAT credit could be denied on the ground of delayed availment.

Analysis: The appellant received input services during the relevant period and utilised the credit for payment of service tax within the period examined by the Tribunal. The objection that the credit was taken beyond the permissible period was found factually incorrect on the record as considered by the Tribunal.

Conclusion: CENVAT credit could not be denied, in favour of the assessee.

Final Conclusion: The demand could not survive once limitation was found to be barred and the credit denial was unsustainable, so the impugned order was set aside with consequential relief.

Ratio Decidendi: Where the taxpayer's conduct establishes bona fides and the Department issues a notice after remaining silent despite knowledge of the facts, the extended period of limitation cannot be invoked and the demand must fail; a factually unsupported objection to credit timing cannot justify denial of CENVAT credit.

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