Extended Limitation Not Applicable in Matter Involving Legal Interpretation: CESTAT Allows Appeal as Demand Time-Barred [Read Order]
Referring to rulings such as Padmini Products and Baidyanath Ayurved Bhavan Ltd., the tribunal noted that extended limitation cannot be applied in cases where there is a bona fide interpretational dispute.
![Extended Limitation Not Applicable in Matter Involving Legal Interpretation: CESTAT Allows Appeal as Demand Time-Barred [Read Order]](https://images.taxscan.in/h-upload/2025/06/25/2054235-legal-interpretation-cestat-taxscan.webp "Extended Limitation Not Applicable in Matter Involving Legal Interpretation: CESTAT Allows Appeal as Demand Time-Barred [Read Order]")
The Ahmedabad Bench of Customs,Excise and Service Tax Appellate Tribunal ( CESTAT ) held that the extended limitation period was not applicable in a case involving legal interpretation and allowed the appeal as the demand was time-barred.
Richardson And Cruddas,appellant-assessee,did not dispute the matter on merits, as it had already been decided in favour of the department by the tribunal in Final Order No. A/2551/WZB/AHD/2011 dated 21.12.2011, which they accepted. However, they challenged the invocation of the extended period of limitation.
The period in question was from 21.10.1986 to 28.11.1988, while the show cause notice was issued on 11.12.1989. At that time, the normal time limit under Section 11A was six months, and the entire demand was claimed to be time-barred.
The assessee argued that the extended period could not be invoked as the issue involved interpretation of law, and there was no intent to evade duty. Being a public sector undertaking, they stressed that such an intent could not be presumed.
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In support, they relied on several rulings, including Mahindra & Mahindra Ltd. [2005 (190) ELT 301 (Tri-LB)], where the matter was referred to a Larger Bench due to conflicting views on limitation. Other decisions cited included rulings of the Supreme Court and tribunal that supported their stand on limitation.
The two member bench comprising Somesh Arora(Judicial Member) and R.Bhagya Devi (Technical Member) found merit in the assessee’s argument on limitation. It noted that the Supreme Court, in cases like Padmini Products and Baidyanath Ayurved Bhavan Ltd., had held that the extended period could not be invoked when the issue involved legal interpretation, and there was no clear intent to evade duty.
The appellate tribunal observed that there were differing legal views on the matter, and the assessee had reasons to doubt the department’s interpretation. Even though the case was decided against them on merits, the extended period was held to be wrongly invoked.
As the entire demand was time-barred, the tribunal allowed the appeal on the ground of limitation and granted consequential relief as per law.
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