Suppression of facts requires a duty to disclose; non-disclosure of financing source could not justify extended limitation or penalty.

Non-disclosure of the source of finance did not amount to suppression of facts where the units had otherwise disclosed their constitution, partners, directors, product details, customers, classification lists, gate passes and RT-12 returns, and the Department had approved the relevant formalities. As no provision required disclosure of financing sources and the Department could have asked for further particulars, the extended limitation period could not be invoked on the basis alleged. The demand raised beyond six months was therefore not legally sustainable, and the connected penalty also could not survive.

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Issues: Whether the demand could be sustained by invoking the extended period on the ground of suppression of facts, and whether the consequent penalty could stand.

Analysis: The only basis for alleging suppression was non-disclosure of the source of finance of the units. The units had disclosed the constitution of the firms, the partners and directors, the product descriptions, customers, classification lists, gate passes and RT-12 returns, and the Department had approved the relevant formalities. There was no provision requiring disclosure of the source of finance, and the Department could have sought further particulars if necessary. On that footing, the non-disclosure relied upon did not amount to suppression of facts so as to justify the extended limitation period.

Conclusion: The invocation of the extended period beyond six months was not legally sustainable, and the demand and connected penalty could not survive.

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