At times, different courts of law have had been dealing with the core issue as to what amounts to suppression of facts for invocation of longer period and demand can be made for a period beyond a normal period upto 5 years .
We are reproducing certain settled ratio as to what does not amout to supression of facts as below :
Once the information is supplied pursuant to the directions of the revenue authority and information so supplied has not been questioned, a belated demand has to be held to be barred by limitation. This proposition finds support from the judgment of the Supreme Court in case of Commissioner of Central Excise, Chandigarh –Vs- Punjab Laminates Pvt. Ltd. reported in 2006(202)ELT 578.
The Hon’ble Apex Court in the case of Commissioner of Central Excise, Chennai –Vs- Chennai Petroleum Corporation Ltd. reported in 2007(211) ELT 193 held that
Where the Department was aware of the activities of the assessee and nothing prevented the Department from visiting the assessee’s site to make enquiries, it had to be held that there was no suppression on the part of the assessee to warrant invocation of the extended period of limitation.
In Collector of Central Excise, Hyderabad –Vs- Chemphar Drugs and Liniments, Hyderabad reported in (1989) 2 SCC 127, the Supreme Court held:–
In order to make the demand for duty sustainable beyond a period of 6 months and up to a period of 5 years in view of the proviso to sub-section (1) of Section 11A of the Act, it has to be established that the duty of excise has not been levied or paid or short-levied or short-paid or erroneously refunded by reasons of either fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty. Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, before the period of six months. Whether in a particular set of facts and circumstances there was any fraud or collusion or wilful misstatement or suppression or contravention of any provision of any Act, is a question of fact depending upon the facts and circumstances of a particular case.”
In Anand Nishikawa Co. Ltd –Vs- Commissioner of Central Excise, Meerut, reported in (2005)7 SCC 749 = 2005 (188) E.L.T. 149 (S.C.), the Supreme Court held:
…We find that “suppression of facts” can have only one meaning that the correct information was not disclosed deliberately to evade payment of duty. When facts were known to both the parties, the omission by one to do what he might have done not that he must have done would not render it suppression. It is settled law that mere failure to declare does not amount to wilful suppression. There must be some positive act from the side of the assessee to find wilful suppression.”
In Commissioner of Central Excise, Aurangabad –Vs- Bajaj Auto Ltd. reported in 2010 (260) E.L.T 17 (S.C.) the Supreme Court referred to and followed its earlier judgments in Collector of Central excise, Hyderabad –Vs- Chemphar Drugs and Liniments, Hyderabad (Supra), Cosmic Dye Chemical –Vs- Collector of Central Excise, Bombay (Supra), Anand Nishikawa Co. Ltd. –Vs- Commissioner of Central Excise, Meerut (Supra) and held that it was settled that
Mere failure to declare would not amount to wilful suppression. There must be some conscious, deliberate act with a view to evade tax.
In Simplex Infrastructures Ltd. Versus Commissioner of Service Tax, Kolkata-2016 (4) TMI 548 – CALCUTTA HIGH COURT, it was held that
a mere mechanical reproduction of the language of the proviso to Section 73(1) of the Finance Act, 1994 does not per se justify invocation of the extended period of limitation. A mere ipse dixit that the noticee wilfully suppressed the material facts with intent to evade payment of service tax is not sufficient. The notice must contain particulars of facts and circumstance in support of such allegation. Even if such particulars are not included in the notice, the Department should be in a position to justify and/or substantiate its allegation of suppression of material facts on the part of the noticee
The proposition which emerges from the judgments of the Supreme Court referred to above, is that mere failure to disclose a transaction and pay tax thereon or a mere misstatement or mere contravention of the Central Excise Act or the Finance Act, 1994, as amended, or of any Rules framed thereunder, is not sufficient for invocation of the extended period of limitation.
The crux is that there has to be a positive, conscious and deliberate action intended to evade tax, for example, a deliberate misstatement or suppression pursuant to a query, in order to evade tax.