Fresh show cause notice required when suppression is newly alleged after the original notice is displaced

A valid show cause notice was required before adjudication when the original notice had been displaced by an appellate order. A later corrigendum could not sustain a new allegation of suppression or extend limitation because that ground was not part of the original notice; if suppression was to be relied upon, a fresh notice was necessary. On the facts recorded, most of the demand was also time barred. The demand based on the substituted allegation was therefore unsustainable, and the impugned order was set aside.

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Issues: (i) Whether there existed a valid show cause notice for adjudication by the Addl. Collector.

Analysis: The original notice issued by the Superintendent was held to have been wiped out by the Collector (Appeals)' order setting aside the adjudication. The subsequent corrigendum introduced a new allegation of suppression and sought to support invocation of the extended period, but that allegation was not part of the original notice. In the circumstances, the proper course, if suppression was to be relied upon, was issuance of a fresh show cause notice. The demand was also found to be largely time barred on the facts recorded.

Conclusion: A valid notice for the impugned adjudication did not exist, and this issue was answered in favour of the assessee.

Final Conclusion: The demand could not be sustained on the basis of the corrigendum, and the impugned order was set aside.

Ratio Decidendi: When the original show cause notice is displaced and a new ground such as suppression is subsequently introduced, the department must issue a fresh notice before proceeding to adjudication; a demand founded on the substituted allegation without such notice is unsustainable, particularly where limitation has also run against most of the demand.

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