Limitation for handloom cess demand fails where exemption claim was fully disclosed in approved classification lists

Full disclosure of the exemption claim in approved classification lists barred the department from alleging suppression or wilful misstatement to invoke the extended period of limitation for handloom cess. Because the assessee had stated that no cess was payable and had sought exemption, and the lists were approved without objection, the demand could not be sustained as time-barred. The stated result was that the appeal succeeded on limitation and the demand was set aside.

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Issues: Whether the demand of handloom cess could be sustained by invoking the extended period of limitation when the assessee had filed classification lists claiming exemption and those lists had been approved.

Analysis: The assessee had disclosed in the classification lists that no handloom cess was payable on the goods in question and had claimed the benefit of the relevant exemption notification. Those classification lists were approved without objection. In such circumstances, the exemption claim was before the department at the time of approval, and the later allegation of wilful misstatement or suppression for invoking the extended period could not stand.

Conclusion: The demand was barred by limitation and could not be sustained.

Final Conclusion: The appeal succeeded on the limitation issue and the demand was set aside.

Ratio Decidendi: Where an assessee has fully disclosed the relevant exemption claim in classification lists that are approved without objection, the department cannot later invoke suppression or wilful misstatement to apply the extended period of limitation.

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