SC Orders Refund for Adani Power on Customs Duty

The Supreme Court of India recently ruled in favor of Adani Power Limited, stating that customs duty should not be imposed on electricity supplied from a special economic zone (SEZ) to the domestic tariff area (DTA).

This decision overturns a 2019 judgment by the Gujarat High Court, which had previously ruled that Adani Power was liable to pay customs duty on electricity supplied after September 2010.

The Supreme Court directed the customs authorities to verify Adani Power's claim and issue refunds within eight weeks.

The dispute originated in 2009 when the central government amended customs rules to impose duty on such electricity supplies.

The Supreme Court clarified that only the Parliament or the state legislature has the power to impose such a tax levy and the executive cannot impose any such tax through mere notification.

Adani Power operates a large coal-based thermal power plant in Mundra, Gujarat, which supplies electricity to distribution companies in Gujarat and Haryana.