Refund cannot be withheld after demand is dropped absent a stay order; stay applications become infructuous.

Refund of amounts already deposited could not be withheld merely because Revenue filed an appeal; the circular relied on required a stay order for withholding refund or rebate. Where the challenged orders had already dropped the service tax demands, the subsequent stay applications to refund served no surviving purpose and were therefore misconceived and infructuous. The stay applications were dismissed.

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Issues: Whether the stay applications filed by Revenue against orders dropping the service tax demands were maintainable and whether refund of the amounts already deposited could be withheld without a stay order.

Analysis: The orders under challenge had already dropped the demands. The Board circular relied upon by the parties clarified that refund or rebate should not be withheld merely because an appeal has been filed unless a stay order has been obtained. The circular also contemplated prompt filing of stay applications in appropriate cases, particularly where refund claims arise from appellate orders, but the impugned orders were passed by the Commissioner of Central Excise and the applications sought to prevent refund after the demand had been dropped. In that situation, the stay applications served no surviving purpose.

Conclusion: The stay applications were misconceived and infructuous and were dismissed.

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