“If You punish them, then they are Your servants”—meaning, by their persistence in their disbelief—"and if You forgive them," then it is by a repentance that occurred from them.
﴿إِن تُعَذبهُمْ فَإِنَّهُم عِبَادك﴾ أَيْ: فَبِإِقَامَتِهِمْ عَلَى كُفْرِهِمْ ﴿وَإِنْ تغْفر لَهُم﴾ فبتوبة كَانَت مِنْهُم.