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2015 (10) TMI 365 - HC - Service TaxClaim of interest on Refund - Duty paid under protest - club or association services - Denial on the ground that request for payment of interest is premature - Appeal against the order of CESTAT pending in Supreme Court - Held That - Revenue having complied with the Tribunal s order and granted refund partially, has withheld the interest claim on a possible realisation that if this is also awarded and paid, the 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. The Revenue had ample time to obtain such interim order from the Supreme Court as is permissible in law so that it is relieved from the obligation to pay interest on the Principal sum. However, it has not taken any such steps and there are no interim prohibitory or restraint orders in Revenue s favour. - Decided in favour of Assessee.
Issues:
1. Service tax liability of a cooperative housing society for amounts contributed by members. 2. Rejection of refund claims by the Assistant Commissioner of Service Tax. 3. Appeal process and decision by the Customs, Excise and Service Tax Appellate Tribunal. 4. Dispute regarding payment of interest on refunded amount. 5. Pending appeal by the Revenue in the Supreme Court and withholding of interest payment. Analysis: Issue 1: Service Tax Liability The petitioner, a cooperative housing society, faced a service tax liability issue for amounts contributed by its members for maintenance and repair. The Commissioner of Service Tax determined that the contributions were for services rendered, making the society liable to pay service tax. Issue 2: Rejection of Refund Claims Despite contesting the service tax liability, the petitioner's refund claims were rejected by the Assistant Commissioner of Service Tax. The rejection was based on the grounds that the society was liable to pay service tax under the Finance Act, leading to subsequent dismissal of an appeal by the Commissioner (Appeals). Issue 3: Tribunal's Decision The petitioner appealed to the Customs, Excise and Service Tax Appellate Tribunal, which ruled in favor of the petitioner on 18.12.2014, allowing the refund claims with interest. The Tribunal set aside the earlier orders and granted consequential reliefs to the petitioner. Issue 4: Interest Payment Dispute Although the principal sum was refunded to the petitioner, the interest on the refunded amount was refused based on a communication from the department. The department cited ongoing disputes and pending appeals as reasons for withholding interest payment. Issue 5: Pending Appeal and Interest Payment The Revenue lodged an appeal in the Supreme Court against the Tribunal's order. The High Court noted the Revenue's delay in complying with procedural requirements and emphasized the need for timely actions. The court directed the Revenue to take necessary steps in the Supreme Court proceedings within two months and release outstanding sums with interest if no interim stay order was obtained within the specified period. In conclusion, the High Court disposed of the Writ Petition, directing the Revenue to act promptly in the Supreme Court proceedings and release the outstanding amounts with interest if no favorable order was obtained within the specified timeline. The court's decision aimed to ensure compliance with legal obligations while preserving the rights of both parties to pursue further legal remedies.
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