In a significant legal victory for the Adani Group, the Supreme Court of India on Monday overturned a Gujarat High Court judgment, providing substantial relief to Adani Power Limited concerning the levy of customs duty on electricity generated within a Special Economic Zone (SEZ). The apex court ruled that the demand for such duty was unlawful, reinforcing the binding nature of its earlier judicial pronouncements.
A Decade-Long Legal Battle Concludes
The dispute centered on customs duty levied on electrical energy generated at Adani Power's coal-based thermal plant within the Mundra SEZ in Gujarat and supplied to the Domestic Tarage Area (DTA). The legal journey began when the Gujarat High Court, in July 2015, struck down this levy for the period from June 26, 2009, to September 15, 2010. The Supreme Court had subsequently declined to interfere with this 2015 verdict in November of the same year.
However, the controversy reignited when authorities attempted to enforce the duty for a later period. A division bench of the Gujarat High Court in 2019 declined to extend the relief granted by its 2015 decision. This prompted Adani Power Ltd to appeal to the Supreme Court, challenging the June 28, 2019, High Court verdict.
Supreme Court's Firm Stand on Judicial Finality
A bench comprising Justices Aravind Kumar and N V Anjaria delivered a robust judgment emphasizing the principle of finality in adjudication. The court held that once its 2015 judgment had declared the levy ultra vires (beyond legal authority), and the Supreme Court itself had declined to interfere, it was mandatory for administrative authorities to align their actions with that declaration.
"Judicial pronouncements are not advisory opinions; they are binding commands of law," the bench asserted. It criticized the executive for continuing to enforce an invalidated levy under a new guise, stating such acts "defy constitutional discipline and erode public confidence in the rule of law."
The court underscored that "finality of adjudication is an essential component of good governance" and that repeating an invalidated levy through successive notifications only leads to needless litigation, burdens the judiciary, and creates prolonged uncertainty for citizens.
Directives and Financial Implications
The Supreme Court explicitly declared that the levy of customs duty on electrical energy cleared by Adani Power from its SEZ unit to the DTA during the relevant period was "without authority of law." Consequently, it issued specific directives:
- The Centre and jurisdictional customs authorities must, after due verification, refund all amounts deposited by Adani Power towards this duty for the period from September 16, 2010, to February 15, 2016.
- No further demands for customs duty on such electricity clearances for the period covered in the appeal shall be enforced against the company.
- The 2019 High Court verdict was set aside as unsustainable.
The bench also clarified that its findings are confined to the specific period and statutory framework of this case and expressed no opinion on any future legislative regime Parliament may enact. The ruling brings legal certainty to Adani Power's 5,200 MW capacity power plant in the Mundra SEZ, concluding a protracted legal battle in its favor.
