New Delhi, Sep 23 (UNI) The Supreme Court today held that the transfer of goods from a Domestic Tariff Area (DTA) to a Special Economic Zone (SEZ) constitutes a domestic supply and not an export outside India, thereby ruling that such transactions are not liable for export duty under the Customs Act, 1962.
A bench comprising Justice B.V. Nagarathna and Justice R. Mahadevan dismissed the union Government’s appeal against Adani Power Ltd. and other entities, thereby affirming earlier rulings that favoured the companies.
The Court categorically observed that customs authorities cannot treat the movement of goods to SEZs as export transactions.
“The movement of goods to SEZs qualifies as a domestic supply, and, therefore, no export duty can be levied,” the bench stated.
The Centre had argued that SEZs are distinct from the domestic economy and hence transfers to them should be treated as exports.
Rejecting this contention, the Court clarified that while SEZs enjoy special incentives, they remain part of India’s territory for the purpose of interpreting the Customs Act.
The verdict is being seen as a significant relief for businesses, especially those operating in SEZs, as it removes a longstanding tax burden and resolves disputes with customs authorities that had insisted on treating such transfers as exports.
The ruling will provide greater certainty for companies like Adani Power Ltd., strengthen the SEZ framework, and encourage more manufacturing and trade activity, while reducing litigation over export duty demands.
