Legal provisions involved: Section 30 of the SEZ Act, 2005; Section 12 and Section 25 of the Customs Act, 1962; Article 265 of the Constitution of India.

Judgement by: Supreme Court of India

Judge/Bench: Justice Aravind Kumar and Justice N.V. Anjaria

Facts

Adani Power runs a power plant in the Mundra SEZ, Gujarat. The electricity generated there was partly used inside the SEZ and partly supplied to buyers in the Domestic Tariff Area (DTA). The Central Government imposed customs duty on electricity supplied from the SEZ to the DTA between 2010 and 2016. Earlier, in 2015, the Gujarat High Court had already ruled that such duty was illegal. Even then, the duty continued to be collected, and in 2019 the Gujarat High Court refused Adani Power’s refund claim. Adani Power approached the Supreme Court.

Key legal provisions

• Section 30 of the SEZ Act, 2005
• Section 12 and Section 25 of the Customs Act, 1962
• Article 265 of the Constitution of India.

Issues raised

Whether customs duty is payable on SEZ-to-DTA electricity and whether a High Court bench can ignore an earlier binding decision on the same issue.

Arguments of the case

Adani Power argued that electricity generated in India is not an import, imported electricity attracts no duty, and the issue was already settled in its favour in 2015. The Government relied on later notifications to support the duty.

Judgement

The Supreme Court ruled that no customs duty can be charged on electricity supplied from an SEZ to the DTA, criticised the High Court for ignoring earlier precedent, and ordered a refund of the duty collected for the period 2010–2016.

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