ADANI POWER LTD. v. UNION OF INDIA
Customs Duty on SEZ-DTA Electricity: Supreme Court Upholds Illegality, Orders Refund, and Reaffirms Binding Nature of Judicial Precedent.
Court: Supreme Court of India
Citation: 2026 INSC 1
Decision Date: 05-01-2026
List of Laws
Special Economic Zones Act, 2005; Special Economic Zones Rules, 2006; Customs Act, 1962; Customs Tariff Act, 1975; Finance Act, 2010; Constitution of India; Doctrine of Stare Decisis
- Facts: Adani Power Ltd. challenged the imposition of customs duty on electrical energy generated in its power plant located in a Special Economic Zone (SEZ) and supplied to the Domestic Tariff Area (DTA). The appellant sought a declaration that no customs duty was leviable and a refund of amounts deposited. The High Court had previously ruled in favor of the appellant concerning a specific notification and period, but the Union sought to extend the levy through subsequent notifications.
- Procedural Posture: This appeal arises from a judgment of the Gujarat High Court that dismissed Adani Power's writ petition seeking a declaration that no customs duty was leviable on electricity supplied from its SEZ unit to the DTA for the period after 15 September 2010 and prior to 16 February 2016, and for a consequential refund. The High Court had held that its earlier judgment was limited to a specific notification and period and that the subsequent notifications were not specifically challenged.
- Issue: Whether customs duty can be levied on electrical energy cleared from an SEZ to the DTA in the absence of a clear charging provision, and whether a prior declaration by the High Court that such a levy is ultra vires binds a subsequent co-ordinate bench regarding later notifications imposing the same levy.
- Holding: The Supreme Court held that the levy of customs duty on electrical energy cleared by the appellant from its SEZ unit to the DTA was without authority of law. The Court allowed the appeal, set aside the High Court's judgment, and directed a refund of the deposited amounts.
- Reasoning: The Court reasoned that the High Court's 2015 judgment had declared the levy ultra vires due to the absence of a lawful charging event under Section 12 of the Customs Act, the limited scope of Section 25 of that Act, the parity requirement of Section 30 of the SEZ Act, and constitutional constraints. This declaration was not limited to a specific notification or period but extended to the authority to levy customs duty on SEZ-to-DTA electricity clearances in the statutory setting. Subsequent notifications merely altered the form and rate of duty but did not cure the fundamental lack of authority. The Court also held that a co-ordinate bench is bound by a prior declaration of law and cannot circumvent it by artificially narrowing down the earlier ruling. The Court emphasized that once a levy is held to be without authority of law, restitution is a necessary incident of the finding of illegality.
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