2016 (9) TMI 980 - HC - Central Excise

Whether the Tribunal is correct in holding that the extended period of limitation cannot be invoked when the respondent has failed to disclose or suppressed the material information from the department as the same came to the knowledge of the Department during the course of Audit only - Held that - once the assessee was found to be at fault in view of the law laid down by Hon ble the Supreme Court in the case of Maruti Suzuki India Ltd. vs. CCE Delhi 2014 (9) TMI 229 - SUPREME COURT and Super Synotex (India) Ltd. vs. CCE Jaipur 2014 (3) TMI 42 - SUPREME COURT the extended period of limitation could have been permitted. Therefore we do not find any merit in the present appeal. The Tribunal has elaborately dealt with the issue of limitation. The assessee cannot be said to be at fault at that time in view of circular of the Board and earlier order of Tribunal in favour of the assessees. Hence the assessee was not at fault and the extended period of limitation was not available. - Decided against the Revenue

Summary

Issues:
1. Whether the extended period of limitation can be invoked when material information was not disclosed or suppressed by the respondent?
2. Whether the show cause notice adequately elaborated the reasons for the extended period?

Analysis:
1. The first issue raised in the appeal was regarding the invocation of the extended period of limitation. The Tribunal held that the extended period cannot be invoked when the respondent fails to disclose or suppress material information, which only came to the department's knowledge during an audit. The appellant argued that despite the issue being decided in favor of the revenue on merits, the Tribunal decided in favor of the assessee on the ground of limitation. The appellant cited judgments of the Supreme Court to support their argument. However, the High Court, after hearing the appellant's counsel, found no merit in the appeal. It was noted that the assessee was not at fault at the time, considering the circular of the Board and the earlier Tribunal order in favor of the assessee. Therefore, the extended period of limitation was not applicable in this case.

2. The second issue revolved around whether the show cause notice sufficiently detailed the reasons for the extended period. The Tribunal was questioned for not elaborating on this aspect in the notice dated 4.11.2008, despite containing allegations to that effect. The High Court, after considering the arguments, found that the Tribunal had extensively addressed the issue of limitation. It was concluded that the assessee could not be deemed at fault, especially in light of the circular from the Board and the previous Tribunal order favoring the assessee. Consequently, the extended period of limitation was deemed inapplicable, and no substantial question of law arose. As a result, the appeal was dismissed by the High Court.

In conclusion, the High Court dismissed the appeal based on the findings that the extended period of limitation could not be invoked due to the lack of fault on the part of the assessee and the detailed considerations made by the Tribunal. The judgment highlighted the importance of disclosure of material information and the adequacy of reasons in show cause notices concerning the invocation of the extended period of limitation in such cases.