Refund interest cannot be withheld merely because an appeal is pending when no interim stay exists.

Pendency of a Revenue appeal before the Supreme Court did not, by itself, justify withholding statutory interest on a refunded service tax amount where no interim stay or restraint order was in force. The Tribunal had already set aside the demand and the refund rejections, and the principal sum had been returned, leaving only the dispute over interest. In the absence of any protective order despite opportunity to obtain one, the Revenue could not continue to deny the interest component. The petitioner was therefore entitled to release of the outstanding interest unless the Revenue secured interim protection within the time granted.

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Issues: Whether the petitioner was entitled to interest on the refunded service tax amount despite the pendency of the Revenue's appeal before the Supreme Court and in the absence of any interim stay or restraint order.

Analysis: The Tribunal had already set aside the demand and the orders rejecting refund, and the principal amount had been refunded. The remaining dispute concerned only the withholding of interest on the ground that the Revenue had filed an appeal before the Supreme Court. Pendency of an appeal by itself did not justify withholding the statutory consequence of refund with interest, especially when no interim order restraining payment had been obtained. The Revenue had ample opportunity to seek interim protection but had not done so, and its position could not be sustained merely because further proceedings were contemplated.

Conclusion: The petitioner was entitled to release of the outstanding interest amount if the Revenue failed to secure an interim stay or restraint order within the time granted by the Court.

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