2023 (9) TMI 526 - SCH - Service Tax

Liability of interest - this Court by way of an interim measure stayed the judgment of Delhi High Court - HELD THAT - The interim measure and direction issued by this Court on 27.09.2016 in the special leave petitions filed by the Department was to enable the Department to proceed with the adjudication but protecting the Assessees from coercive steps being taken during the process of adjudication provided the Assessees co-operated with the said process. However, this Court in the said order also categorically stated in case the respondent(s) succeed they shall be entitled to refund with interest . The aforesaid direction is related to the proceedings pending before this Court inasmuch as the success or otherwise of the Assessee was relatable to the proceedings before this Court and not to any subsequent adjudication which was started by the Department as against the Assessees - In that view of the matter, it is found that order dated 27.09.2016 is in conformity with final order dated 01.09.2016 passed by the Division Bench of the High Court, which was ultimately affirmed by the final order of this Court dated 23.01.2019. The Department is liable to pay interest @ 6% per annum on the aforesaid sum of Rs. 67,44,19,167/- and 6,50,00,000/- respectively from 01.10.2016, till the date of realisation - Application allowed.

Summary

Issues involved:
The issues involved in this case are the payment of interest on a specified amount, the interim order staying the judgment of the Delhi High Court, and the liability of the Department to pay interest to the Assessees.

Payment of Interest:
The Delhi High Court had directed the payment of interest on two amounts within a period of four weeks at a rate of 6% per annum. This order was initially stayed by the Supreme Court, but the interim order was lifted in 2019. The Assessees filed Miscellaneous Applications seeking the payment of interest as the amount had not been refunded.

Interim Order and Liability of Department:
The Supreme Court had stayed the Delhi High Court judgment temporarily, allowing the Department to proceed with adjudication against the Assessees but preventing coercive steps. The Department argued that no interest liability arose during this period. However, the Assessees contended that the payment of interest was necessary as per the Delhi High Court's direction, even without proper legal proceedings.

Final Decision:
The Supreme Court found that the interim order issued in 2016 was to facilitate adjudication by the Department but did not negate the Assessees' right to interest if they succeeded. The Court held that the Department was liable to pay interest at 6% per annum on the specified amounts from October 2016 until realization. The Miscellaneous Applications were allowed, and the Department was ordered to pay the interest as directed.