New Delhi, Jan 5 (UNI) The Supreme Court on Monday set aside a June 28, 2019 judgment of the Gujarat High Court, which had denied relief to Adani Power on the levy of customs duty on electricity supplied from its Special Economic Zone (SEZ) unit at Mundra to the Domestic Tariff Area (DTA). A Bench comprising Justice Aravind Kumar and Justice N.V. Anjaria delivered the verdict.
The Court was examining whether the Gujarat High Court was justified in limiting the effect of its earlier 2015 ruling and in declining to entertain Adani Power’s broader challenge to the levy of customs duty imposed after 2010 on electricity supplied from an SEZ to the DTA.
Adani Power, which operates a large coal-based thermal power plant within the Mundra SEZ as a co-developer, supplies electricity both within the SEZ and to distribution companies in Gujarat and other states. The dispute arose after amendments to the customs framework sought to impose duty on electricity cleared from an SEZ to the DTA, despite the fact that electricity imported into India from foreign countries was not subject to any such levy.
During the hearing, Adani Power was represented by Senior Advocate P. Chidambaram, along with Advocates Mahesh Agarwal, Anshuman Srivastava, Rohan Talwar, Naman Agarwal and E.C. Agrawala, who contended that the levy was discriminatory and contrary to the SEZ framework.
The union of India, represented by Additional Solicitor General Raghvendra P. Shankar, along with Advocates Gurmeet Singh Makker, Sharath Nambiar, Diwakar Sharma, Satvika Thakur, B. Sunita Rao and Ishaan Sharma, defended the levy and supported the High Court’s reasoning.
In an earlier round of litigation, the Gujarat High Court in July 2015 had struck down part of the levy mechanism and held that Adani Power was entitled to exemption from customs duty on electricity supplied from the SEZ to the DTA for a limited period between June 2009 and September 2010.
That ruling was allowed to attain finality after the Supreme Court declined to interfere. Subsequently, SEZ authorities maintained that the exemption granted to Adani was confined strictly to the specified period and that customs duty was payable on electricity supplied thereafter.
Adani challenged this interpretation before the Gujarat High Court in 2016, seeking a declaration that no customs duty was payable even beyond the earlier period, along with a refund of amounts already recovered.
However, in its June 2019 judgment, the High Court rejected Adani’s plea, holding that the 2015 decision had consciously restricted relief to a defined time frame and that broader relief could not be claimed through a subsequent writ petition.
The High Court also observed that extending the exemption could result in Adani deriving a double benefit under the post-2010 regulatory regime. The Supreme Court has now overturned that decision, reopening the issue of the levy of customs duty on electricity supplied from SEZs to the DTA.
SC sets aside Gujarat HC ruling on customs duty for Adani Power SEZ electricity supplies
