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When refund ordered is paid to the Appellant, withholding interest thereon considering that if interest is also paid, the appeal before the Supreme Court would be rendered infructuous is not the correct understanding of law.
Facts:
The Appellant is a cooperative housing society which paid service tax under protest on amounts contributed by the members. The Tribunal ruled in their favour stating that services to members of club/co-operative housing society is not a service by one to another and accordingly service tax paid was ordered to be refunded. The Respondent refunded the principal sum, but refused to pay interest thereon stating that the Tribunal order was not accepted by them and they were in the process of filing an appeal against the said order. It was also stated that the Appellant should wait till the matter is decided at the Supreme Court level.
Held:
The High Court observed that the interest was withheld on a possible realisation that if the same is awarded their proceedings before the Supreme Court would be rendered infructuous. This cannot be the legal position nor can the understanding of the parties be based on the same. Further it was also noted that if the Respondent did not intend to pay the interest amount, it could have obtained such interim orders from the Supreme Court. The Court held that the Respondent should obtain requisite orders from the Supreme Court within a period of two months of receipt of this order. In the absence of such orders, interest should be paid within four weeks of expiry of two months.
