Summary
| Category | Data |
|---|---|
| Court | Supreme Court of India |
| Case Number | C.A. No.-000022-000022 – 2026 |
| Diary Number | 35277/2019 |
| Judge Name | HON’BLE MR. JUSTICE ARAVIND KUMAR |
| Bench | HON’BLE MR. JUSTICE ARAVIND KUMAR and HON’BLE MR. JUSTICE PRASANNA B. VARALE |
| Precedent Value | Binding authority |
| Overrules / Affirms | Affirms the Gujarat High Court’s 15 July 2015 ratio and its affirmation by this Court |
| Type of Law | Tax law; Constitutional law |
| Questions of Law |
|
| Ratio Decidendi | The High Court’s 15 July 2015 decision held that: (a) Section 12 Customs Act charges only “imports into India”—SEZ-to-DTA electricity is not an import; (b) Section 25 exemption power cannot be used to create a new levy; (c) retrospective levies without parliamentary sanction violate Article 265; and (d) claw-back of duty on inputs plus duty on output imposes an arbitrary double burden. Those propositions strike at the very authority to tax electricity cleared from an SEZ to the DTA. Being affirmed here, they apply to all successor notifications unless Parliament alters the framework. |
| Judgments Relied Upon | State of Uttar Pradesh v. Ajay Kumar Sharma (2016) 15 SCC 289 |
| Logic / Jurisprudence / Authorities Relied Upon by Court |
|
| Facts as Summarised by the Court | Adani Power’s Mundra SEZ plant generated power partly for DTA buyers. Section 30 SEZ Act deems removals “as if imported.” Imports of electricity bore nil duty. In 2010 Notification 25/2010-Cus., the executive used Section 25 to impose 16 % retrospective duty, later reduced by Notifications 91/2010-Cus. (₹0.10/unit) and 26/2012-Cus. (₹0.03/unit). The Gujarat HC in 2015 struck down the 16 % levy, and this Court refused to interfere. The appellant then sought refund for duties paid from 16 Sep 2010 to 15 Feb 2016. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All High Courts and subordinate courts in India on taxation and delegated legislation principles |
| Persuasive For | Administrative authorities; fiscal tribunals |
| Follows | State of Uttar Pradesh v. Ajay Kumar Sharma (2016) 15 SCC 289 |
What’s New / What Lawyers Should Note
- Exemption notifications under Section 25 Customs Act cannot be repurposed to create a new duty; their object is to relax existing charges.
- Section 30 of the SEZ Act’s “as if imported” fiction ensures parity of duty rates but does not convert domestic transactions into imports.
- A declaration striking at the root of a levy binds coordinate Benches; any doubt must be referred to a larger Bench, not sidestepped.
- Successor notifications continuing an already-invalid levy cannot be insulated from challenge merely by changing rate or period.
- Judicial finality compels administrative authorities to conform to binding declarations of law and refrain from relitigating identical issues.
Summary of Legal Reasoning
- Charging Provision vs. Parity Clause
Section 12 Customs Act levies duty only on “imports into India.” Section 30 SEZ Act provides duty parity; it does not create a new charging event for intra-national SEZ-to-DTA supplies. - Limits of Exemption Power
Section 25 Customs Act empowers the executive to exempt goods from duties “leviable thereon.” Using it to introduce a fresh 16 % levy on power is a colourable exercise of delegated legislation. - Retrospective Levy and Article 265
Imposing duty retrospectively without clear parliamentary sanction violates the constitutional requirement that no tax be collected except by authority of law. - Arbitrary Double Burden
Rule 47(3) SEZ Rules already claw back duty-free input benefits on electricity; imposing a further duty on the output is arbitrary and unfair. - Successor Notifications
Notifications 91/2010-Cus. and 26/2012-Cus. merely continued the same unauthorised levy at reduced rates and could not cure the fundamental illegality. - Doctrine of Precedent
Coordinate High Court Benches are bound by earlier decisions of equal strength; any perceived conflict must be referred to a larger Bench. - Finality and Compliance
Once a levy is held ultra vires and that holding is affirmed, administrative authorities must cease enforcement and refund amounts collected under the invalid levy.
Arguments by the Parties
Petitioner (Adani Power Ltd.)
- The 2015 Gujarat HC decision declared as a matter of principle that SEZ-to-DTA electricity cannot attract customs duty under the existing scheme.
- Electricity imports bear nil duty; parity requires SEZ-generated power also be at nil rate—imposing any duty violates Article 14 and the SEZ Act’s object.
- Exemption notifications (Nos. 25/2010, 91/2010, 26/2012) all rest on the same ultra vires premise; inability to levy cannot be circumvented by altering rate or retrospective/prospective framing.
- Judicial finality demands enforcement of the binding 2015 declaration without forcing fresh litigation on successor notifications.
Respondent (Union of India & Customs Authorities)
- The 2015 HC judgment was confined to Notification 25/2010-Cus. and the period up to 15 Sep 2010.
- Notifications 91/2010-Cus. and 26/2012-Cus. operate prospectively and at nominal specific rates for later periods; they were not specifically challenged.
- No court can strike down a statutory instrument not impugned in the pleadings.
- The appellant paid the per-unit duty without protest for years; a belated refund claim should not succeed.
- From 16 Feb 2016, Notification 9/2016-Cus. exempted such power, addressing the grievance prospectively.
Factual Background
Adani Power operates a 5,200 MW coal-based plant in Mundra SEZ, supplying surplus electricity to the DTA. SEZ clearances are chargeable “as if imported” under Section 30 SEZ Act, but imported electricity bore nil customs duty pre-2009. In 2010, Notification 25/2010-Cus. (effective retrospectively from 26 Jun 2009) used Section 25 to impose a 16 % duty on SEZ-to-DTA electricity. This was challenged and stayed by Gujarat HC in May 2010. Subsequent Notifications 91/2010-Cus. (₹0.10/unit) and 26/2012-Cus. (₹0.03/unit) applied prospectively. The HC in July 2015 struck down the 16 % levy. The appellant then sought refunds for the per-unit duties paid between 16 Sep 2010 and 15 Feb 2016. The HC declined relief in June 2019, leading to this appeal.
Statutory Analysis
- Section 12, Customs Act: Charges duty only on goods “imported into India.” No independent charge on domestic supply.
- Section 25, Customs Act: Empowers the government to exempt from duties “leviable thereon,” not to create a new levy.
- Section 30, SEZ Act: Deems SEZ-to-DTA removals “as if imported,” ensuring parity of rates but not converting them into actual imports.
- Rule 47(3), SEZ Rules, 2006: Claws back duty-free input benefits for electricity, preventing misuse of exemption on inputs.
- Article 14 & Article 265, Constitution: Ensure equality before law and require that no tax be levied except by authority of law.
Procedural Innovations
- Affirmation that sequel writ petitions enforcing a binding declaration can seek refund without fresh challenges to materially identical notifications.
- Reiteration that coordinate High Court benches must follow or refer earlier decisions of equal strength, safeguarding the stability of law.
Alert Indicators
- ✔ Precedent Followed
- ✔ Time-Sensitive (finality principle to prevent endless litigation)