# Adani Power Ltd. & Anr v. Union of India & Ors

- **Citation:** 2026 INSC 1
- **Court:** Supreme Court of India
- **Decided:** 2026-01-05
- **Case number:** Civil Appeal No. 22 of 2026
- **Bench:** Aravind Kumar, N.V. Anjaria
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/adani-power-ltd-anr-v-union-of-india-ors-39184
- **Pages:** 30

## Headnote

By the impugned judgment dated 28 June 2019, the High Court
declined to grant the reliefs sought by the appellant, Adani
Power Limited, which had inter alia prayed for a declaration that
no customs duty was leviable on electrical energy generated in
its power plant located in a Special Economic Zone (SEZ) and
supplied to the Domestic Tariff Area (DTA), and for consequential
refund of amounts deposited towards such duty. The High Court
took the view that its earlier judgment delivered in 2015 in favour
of the appellant was confined to a particular notification and period,
and could not be extended to the later period or to subsequent
notifications issued by the Union.
Headnotes†
Customs Act, 1962 - ss.12, 25 - Special Economic Zones Act,
2005 - s.30 - SEZ Rules, 2006 - r.47(3) - Finance Act, 2010 -
Firstly, what, in law, did the Gujarat High Court decide in its
judgment dated 15 July 2015, and what is the true scope of
that decision - Secondly, whether, in the period subsequent
to 15 September 2010 and prior to 16 February 2016, there
was any material changes in the statutory position or factual
footing that would justify a different result from that arrived
at in 2015 judgment - Thirdly, whether the High Court, in its
impugned judgment of 28 June 2019, was justified in holding
that no relief could be granted to the appellant in the absence
of a specific and fresh challenge to Notification Nos. 91/2010Cus. and 26/2012-Cus. - Fourthly, whether, in view of the 2015
declaration of law and its affirmation, the High Court in 2019
was at liberty, being a coordinate Bench, to deny relief by
narrowing the effect of the earlier pronouncement:
* Author
2
[2026] 2 S.C.R.
Supreme Court Reports
Held: The Gujarat High Court's judgment dated 15 July 2015, as
a matter of law, declared that customs duty could not be levied on
electrical energy cleared from the appellant's SEZ unit to the DTA,
having regard to the absence of a lawful charging event u/s.12 of
the Customs Act, the limited scope of s.25 of that Act, the parity
requirement of s.30 of the SEZ Act and the constitutional constraints
of Arts.14 and 265 is squarely applicable to the judgment and order
dated 28.06.2019 - That declaration was not confined in principle to
Notification No.25/2010-Cus. or to the period ending 15 September
2010 - It went to the authority to levy customs duty on SEZ-to-DTA
electricity clearances in the statutory setting then obtaining - The
subsequent notifications namely, Notification No.91/2010-Cus.
prescribing ten paise per unit and Notification No.26/2012-Cus.
prescribing three paise per unit, did not create a new levy on a new
footing - They merely continued the same levy in altered form - The
change in arithmetical rate by prospective character does not cure
the lack of authority in principle - There was no material change
in law or fact between 15 September 2010 and 15 February 2016
that would justify a departure from the 2015 ruling - Section 30
of the SEZ Act remained unaltered - Imported electrical energy
bore no customs duty under the Customs Tariff Act, 1975 - The
same parity logic applied to S.C.A. No.2233 of 2016 disposed of
on 28.06.2019 - The Division Bench of the High Court in 2019,
being a co-ordinate Bench, was bound either to follow the 2015
decision or, if it doubted its correctness or applicability, ought to
have referred the question to a larger Bench - It could not have
circumvented that discipline by artificially narrowing down the earlier
ruling - Its refusal to extend the 2015 declaration to the later period
was therefore contrary to law - Once it is held that the levy itself
was without authority of law, the State cannot retain the amount
collected under such levy - Restitution is a necessary incident of
the finding of illegality - Accordingly, the impugned judgment of
the High Court dated 28 June 2019 cannot be sustained. [Para 86]
Customs Act, 1962 - ss.12, 25 - Special Economic Zones
Act, 2005 - s.30 - SEZ Rules, 2006 - r.47(3) -

## Text

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[2026] 2 S.C.R. 1 : 2026 INSC 1
Adani Power Ltd. & Anr
v.
Union of India & Ors.
(Civil Appeal No. 22 of 2026)
05 January 2026
[Aravind Kumar* and N.V. Anjaria, JJ.]
Issue for Consideration
By the impugned judgment dated 28 June 2019, the High Court
declined to grant the reliefs sought by the appellant, Adani
Power Limited, which had inter alia prayed for a declaration that
no customs duty was leviable on electrical energy generated in
its power plant located in a Special Economic Zone (SEZ) and
supplied to the Domestic Tariff Area (DTA), and for consequential
refund of amounts deposited towards such duty. The High Court
took the view that its earlier judgment delivered in 2015 in favour
of the appellant was confined to a particular notification and period,
and could not be extended to the later period or to subsequent
notifications issued by the Union.
Headnotes†
Customs Act, 1962 - ss.12, 25 - Special Economic Zones Act,
2005 - s.30 - SEZ Rules, 2006 - r.47(3) - Finance Act, 2010 -
Firstly, what, in law, did the Gujarat High Court decide in its
judgment dated 15 July 2015, and what is the true scope of
that decision - Secondly, whether, in the period subsequent
to 15 September 2010 and prior to 16 February 2016, there
was any material changes in the statutory position or factual
footing that would justify a different result from that arrived
at in 2015 judgment - Thirdly, whether the High Court, in its
impugned judgment of 28 June 2019, was justified in holding
that no relief could be granted to the appellant in the absence
of a specific and fresh challenge to Notification Nos. 91/2010Cus. and 26/2012-Cus. - Fourthly, whether, in view of the 2015
declaration of law and its affirmation, the High Court in 2019
was at liberty, being a coordinate Bench, to deny relief by
narrowing the effect of the earlier pronouncement:
* Author
2
[2026] 2 S.C.R.
Supreme Court Reports
Held: The Gujarat High Court's judgment dated 15 July 2015, as
a matter of law, declared that customs duty could not be levied on
electrical energy cleared from the appellant's SEZ unit to the DTA,
having regard to the absence of a lawful charging event u/s.12 of
the Customs Act, the limited scope of s.25 of that Act, the parity
requirement of s.30 of the SEZ Act and the constitutional constraints
of Arts.14 and 265 is squarely applicable to the judgment and order
dated 28.06.2019 - That declaration was not confined in principle to
Notification No.25/2010-Cus. or to the period ending 15 September
2010 - It went to the authority to levy customs duty on SEZ-to-DTA
electricity clearances in the statutory setting then obtaining - The
subsequent notifications namely, Notification No.91/2010-Cus.
prescribing ten paise per unit and Notification No.26/2012-Cus.
prescribing three paise per unit, did not create a new levy on a new
footing - They merely continued the same levy in altered form - The
change in arithmetical rate by prospective character does not cure
the lack of authority in principle - There was no material change
in law or fact between 15 September 2010 and 15 February 2016
that would justify a departure from the 2015 ruling - Section 30
of the SEZ Act remained unaltered - Imported electrical energy
bore no customs duty under the Customs Tariff Act, 1975 - The
same parity logic applied to S.C.A. No.2233 of 2016 disposed of
on 28.06.2019 - The Division Bench of the High Court in 2019,
being a co-ordinate Bench, was bound either to follow the 2015
decision or, if it doubted its correctness or applicability, ought to
have referred the question to a larger Bench - It could not have
circumvented that discipline by artificially narrowing down the earlier
ruling - Its refusal to extend the 2015 declaration to the later period
was therefore contrary to law - Once it is held that the levy itself
was without authority of law, the State cannot retain the amount
collected under such levy - Restitution is a necessary incident of
the finding of illegality - Accordingly, the impugned judgment of
the High Court dated 28 June 2019 cannot be sustained. [Para 86]
Customs Act, 1962 - ss.12, 25 - Special Economic Zones
Act, 2005 - s.30 - SEZ Rules, 2006 - r.47(3) - Finance Act,
2010 - Whether the levy of customs duty on electrical
energy cleared by the appellant from its SEZ unit to the DTA
during the relevant period, as sought to be enforced through
Notification No. 25/2010-Cus., Notification No. 91/2010-Cus.,
Notification No. 26/2012-Cus., and similar instruments, was
without authority of law:
[2026] 2 S.C.R.
3
Adani Power Ltd. & Anr v. Union of India & Ors.
Held: The levy of customs duty on electrical energy cleared by the
appellant from its SEZ unit to the DTA during the relevant period,
as sought to be enforced through Notification No.25/2010-Cus.,
Notification No.91/2010-Cus., Notification No.26/2012-Cus., and
similar instruments, was without authority of law. [Para 87]
Judicial Discipline - Decision by Co-ordinate Bench of the
High Court:
Held: When a coordinate Bench of a High Court has already
determined a question of law, a subsequent Bench of equal strength
is bound to follow that view; if it doubts its correctness, the only
permissible course is to refer the matter to a larger Bench. [Para 80]
Administrative Law - Where a court of competent jurisdiction
has struck down the foundation of a levy as ultra vires:
Held: In administrative law, where a court of competent jurisdiction
has struck down the foundation of a levy as ultra vires, that
declaration renders all successive and derivative attempts to
enforce the same levy equally unenforceable, unless the statutory
or factual basis has materially changed - The State cannot defend
the continuation of the same vice by saying, this is a different
notification number - The Court is bound to look past the label
and examine the substance. [Para 69]
Customs Act, 1962 - ss.12, 25 - Special Economic Zones Act,
2005 - s.30 - SEZ Rules, 2006 - r.47(3) - Finance Act, 2010 -
Where a levy has been declared to be without authority of law:
Held: Where a levy has been declared to be without authority of law,
a subsequent petition seeking enforcement of that declaration and
consequential relief cannot be treated as a fresh challenge merely
because the levy is sought to be continued under later or similar
notifications - In the absence of any new statutory basis, such
notifications do not create a new cause of action - A constitutional
court is entitled to grant effective relief without insisting upon
separate challenges to each such notification. [Para 74]
Case Law Cited
State of Uttar Pradesh v. Ajay Kumar Sharma [2015] 12 SCR 627 :
(2016) 15 SCC 289 - referred to.
4
[2026] 2 S.C.R.
Supreme Court Reports
List of Acts
Constitution of India; Special Economic Zones Act, 2005; Special
Economic Zones Rules, 2006; Customs Act, 1962; Finance Act, 2010.
List of Keywords
Special Economic Zone (SEZ); Customs duty; Electrical energy;
Absence of charging event; Section 25 of Customs Act, 1962;
Delegated legislation; Exemption notification; Retrospective levy;
Judicial discipline; Binding precedent; Domestic tariff area (DTA);
Judicial precedent; Colourable exercise of delegated authority;
Restitution; Discipline of precedent; Institutional necessity; Stability;
Predictability; Doctrine of judicial discipline; Sequel proceeding;
Fiscal jurisprudence; Subordinate legislation; Public interest; Stare
decisis et non quieta movere; Interest reipublicae ut sit finis litium.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 22 of 2026
From the Judgment and Order dated 28.06.2019 of the High Court
of Gujarat at Ahmedabad in SCA No. 2233 of 2016
Appearances for Parties
Advs. for the Appellant(s):
P. Chidambaram, Sr. Adv., Mahesh Agarwal, Anshuman Srivastava,
Rohan Talwar, Naman Agarwal, E. C. Agrawala.
Advs. for the Respondent(s):
Raghvendra P. Shankar, A.S.G., Gurmeet Singh Makker, Sharath
Nambaiar, Diwakar Sharma, Ms. Satvika Thakur, Ms. B.sunita
Rao, Ishaan Sharma.
Judgment / Order of the Supreme Court
Judgment
Aravind Kumar, J.
1.
Leave granted.
2.
This appeal is directed against the judgment and order dated 28
June 2019 passed by the High Court of Gujarat in Special Civil
[2026] 2 S.C.R.
5
Adani Power Ltd. & Anr v. Union of India & Ors.
Application No. 2233 of 2016. By the impugned judgment, the High
Court declined to grant the reliefs sought by the appellant, Adani
Power Limited, which had inter alia prayed for a declaration that
no customs duty was leviable on electrical energy generated in its
power plant located in a Special Economic Zone (SEZ) and supplied
to the Domestic Tariff Area (DTA), and for consequential refund of
amounts deposited towards such duty. The High Court took the view
that its earlier judgment delivered in 2015 in favour of the appellant
was confined to a particular notification and period, and could not
be extended to the later period or to subsequent notifications issued
by the Union. Aggrieved, the appellant has approached this Court.
3.
The controversy is not merely fiscal. It raises, in our view, questions
that bear upon three foundational aspects of our legal order: first,
the limits of delegated legislation in matters of taxation; secondly,
the discipline of judicial precedent and the obligation of co-ordinate
Benches to adhere to settled law; and thirdly, the obligation of the
State to give effect to judicial declarations instead of reasserting, in
altered form, a levy already declared to be without authority of law.
4.
We have heard Mr. Chidambaram, learned senior counsel appearing
on behalf of the appellant and the learned Raghav Shankar Additional
Solicitor General appearing on behalf of the Respondents and before
proceeding to consider their arguments it would be of relevance to
note the factual background and it reads:
I.
FACTUAL BACKGROUND
5.
The appellant operates a coal-based thermal power plant of about
5,200 MW capacity within the Mundra Special Economic Zone (SEZ)
in the State of Gujarat. The appellant is a co-developer in that notified
SEZ. The electricity generated at this plant is partly consumed within
the SEZ and substantially supplied to buyers in the DTA, including
State utilities.
6.
Under the architecture of the Special Economic Zones Act, 2005
("the SEZ Act"), an SEZ is afforded a special fiscal treatment to
encourage manufacturing and infrastructure creation. Section 30 of
the SEZ Act provides that any goods removed from an SEZ into the
DTA shall be chargeable to duties of customs "as if such goods had
been imported into India". The intent is to maintain parity between
goods physically imported into India from abroad and goods cleared
from an SEZ into the domestic economy.
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[2026] 2 S.C.R.
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7.
Prior to 2009, electrical energy per se did not attract customs duty
on import. The relevant tariff entry treated imported electricity at a
nil rate. In consequence, though Section 30 of the SEZ Act deems
removals from the SEZ into the DTA to be subject to customs duty
"as if imported", electrical energy moving from an SEZ to the DTA
bore, in practical terms, no customs duty. The fiscal neutrality in
relation to electricity was maintained in a different way.
8.
Rule 47(3) of the SEZ Rules, 2006 recognises that power generated
in an SEZ may also be supplied to the DTA. To prevent misuse of
duty-free inputs, Rule 47(3) provides that where electricity produced
using duty-free inputs in the SEZ is cleared to the DTA, the SEZ unit
would have to make good the customs duty benefit on that proportion
of inputs relatable to the electricity so supplied out of the zone. In
effect, the law captured the customs component in the inputs (for
example, imported coal) to the extent the resulting electricity left the
SEZ. The law did not, however, impose an independent customs
duty on the electricity itself.
9.
Matters changed in 2010. In the Union Budget of that year, the
Central Government introduced a fiscal measure designed to impose
customs duty on electrical energy cleared from an SEZ to the DTA.
Clause 60 of the Finance Bill, 2010 (later enacted in the Finance
Act, 2010) introduced changes to the general customs exemption
notification regime such that electrical energy removed from an SEZ
to the DTA would become liable to duty. What is of significance is
that this was stated to operate retrospectively from 26 June 2009.
10. In anticipation of this change, on 27 February 2010, the Central
Government issued Notification No. 25/2010-Cus. What this
notification purported to do was, in form, to "grant an exemption"; in
substance, it introduced a liability. It stipulated that electrical energy
cleared from an SEZ to the DTA would suffer customs duty at 16%
ad valorem, with retrospective effect from 26 June 2009. On the very
footing of this notification, the authorities raised demands upon the
appellant for payment of duty at 16%, not merely prospectively but
going back to June 2009.
11. The appellant challenged this levy by filing a writ petition before the
High Court of Gujarat in 2010. The challenge was to the legality and
constitutional validity of the impost on electrical energy so cleared.
During the pendency of the writ petition, the High Court granted
[2026] 2 S.C.R.
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Adani Power Ltd. & Anr v. Union of India & Ors.
interim relief on 6 May 2010. The appellant was permitted to continue
to clear electricity from the SEZ into the DTA without payment of
the disputed duty, subject to furnishing a bank guarantee to secure
the amount in dispute. The appellant furnished the bank guarantee
accordingly. Thus, though immediate cash outflow was avoided, the
alleged liability stood secured.
12. While the writ petition remained pending, the Union altered the duty
structure. With effect from 16 September 2010, by Notification No.
91/2010-Cus., the earlier 16% ad valorem duty was replaced by a
specific-rate duty of ₹0.10 (ten paise) per unit of electrical energy
cleared from the SEZ to the DTA. Later, with effect from 18 April
2012, by Notification No. 26/2012-Cus., this was further reduced to
₹0.03 (three paise) per unit. These subsequent notifications functioned
prospectively. They did not, however, undo the retrospective
component of Notification No. 25/2010-Cus. for the period 26 June
2009 to 15 September 2010.
13. The effect of this shift was twofold. First, for the period 26 June
2009 to 15 September 2010, the authorities asserted a retrospective
customs duty at 16% ad valorem under Notification No. 25/2010Cus. Secondly, for the period thereafter, the appellant was required
to pay, and did pay, a per-unit customs duty on electrical energy
cleared from the SEZ to the DTA, initially at ten paise per unit and
later at three paise per unit, pursuant to Notification Nos. 91/2010Cus. and 26/2012-Cus.
14. The appellant persisted with its challenge, maintaining that no customs
duty at all could be lawfully imposed on the clearance of electrical
energy from an SEZ into the DTA, having regard to the statutory
scheme and constitutional limitations. The writ petition came to be
finally heard by a Division Bench of the Gujarat High Court, which,
by a judgment dated 15 July 2015, allowed the Writ petition.
15. The High Court's 2015 judgment is central or pivotal to the case on
hand. The High Court held, first, that the statutory charge for customs
duty lies in Section 12 of the Customs Act, 1962, read with Entry 83
of List I of the Seventh Schedule. Section 12 contemplates a levy
on goods "imported into India". The High Court found that electrical
energy generated within India in an SEZ and wheeled to buyers in
the DTA is not, in substance, a case of "import into India". An SEZ,
while fiscally distinct in treatment, is not a foreign territory. The
8
[2026] 2 S.C.R.
Supreme Court Reports
legal fiction in Section 30 of the SEZ Act ("as if imported") allows
ascertainment of the rate of duty applicable to comparable imports;
it does not convert intra-national supply of electricity into an act of
import. There was, therefore, no identifiable charging event to attract
customs duty under Section 12 in respect of such electricity.
16. The High Court held, secondly, that Notification No. 25/2010-Cus.,
though couched as an "exemption" notification, in truth operated as an
instrument to impose duty. Section 25 of the Customs Act empowers
the Central Government to exempt, in whole or in part, goods from
duty that is otherwise leviable. That provision is beneficent in nature. It
is a power to relax, not a power to create or levy tax. The High Court
concluded that the Union could not, under the colour of exercising
an exemption power, introduce a new levy at 16% ad valorem and
then apply it retrospectively. The notification was, therefore, beyond
the source of power: a colourable exercise of delegated authority.
17. The High Court held, thirdly, that the retrospective fastening of a 16%
levy from 26 June 2009 violated the discipline of Article 265 of the
Constitution which declares that no tax shall be levied or collected
except by authority of law. The Court found that the executive could
not, by subordinate legislation, retrospectively cast a tax liability for
a past period absent of a clear charging sanction from Parliament.
Once the basic levy was itself ultra vires, its retrospective application
necessarily fails.
18. The High Court held, fourthly, that the structure of the levy created an
arbitrary and unfair double burden. The SEZ Rules already ensured
that, to the extent electricity left the zone for the DTA, the benefit of
duty-free inputs was clawed back. If, in addition, customs duty were
again recovered on the electricity so supplied, the same economic
stream i.e., generation and sale of power would be subjected twice to
customs incidence: once through neutralisation of duty on inputs, and
again on clearance of the output. That, the Court held, was arbitrary.
19. For these reasons, the High Court in 2015 struck down the levy of
customs duty on electrical energy cleared by the appellant from its
SEZ unit into the DTA for the period 26 June 2009 to 15 September
2010. The offending notification and the enabling clause in the
Finance Act were quashed to that extent as being ultra vires both the
Customs Act and the Constitution. The appellant's bank guarantee
was directed to be released. The High Court thus, in substance,
[2026] 2 S.C.R.
9
Adani Power Ltd. & Anr v. Union of India & Ors.
declared that, on the statutory scheme as it then stood, customs
duty could not be demanded on the appellant's SEZ-to-DTA power
clearances.
20. The Union of India carried the matter to this Court. On 20 November
2015, this Court declined to interfere with the judgment of the High
Court. A subsequent review petition filed by the Union of India was
dismissed in April 2016. The declaration of law made by the High
Court, therefore, attained finality at least as between the parties, and
in practical terms within the territorial jurisdiction of that High Court.
21. Thereafter, with effect from 16 February 2016, the Union issued
Notification No. 9/2016-Cus. Under this measure, clearances of
electrical energy from certain large SEZ-based generating stations
(including the appellant's, which has capacity in excess of 1000 MW
and was approved prior to 27 February 2009) into the DTA were
placed at a nil rate of customs duty. Thus, prospectively from 16
February 2016, the levy itself was withdrawn insofar as the appellant
was concerned.
22. What remained live, however, was the period between 16 September
2010 and 15 February 2016. For that period, the appellant had
paid per-unit customs duty at ten paise and three paise pursuant to
Notification Nos. 91/2010-Cus. and 26/2012-Cus. respectively. After
the 2015 judgment, the appellant sought refund of those amounts,
contending that once the High Court had declared that no customs
duty could be imposed on SEZ-to-DTA electricity clearances, any
amount collected under the same head, though at a different rate
and prospectively, were liable to be refunded.
23. The appellant thereafter instituted Special Civil Application No. 2233
of 2016 before the High Court of Gujarat. In the said writ petition,
the appellant prayed for (i) a declaration that no customs duty was
leviable on clearances of electricity from its SEZ unit to the DTA for
the subsequent period as well; (ii) directions restraining the authorities
from seeking to recover such duty; and (iii) consequential refund of
the amounts already deposited under protest towards such levy for
the period after 15 September 2010 and prior to 16 February 2016.
24. The writ petition of 2016 came to be adjudicated by a Division Bench
of the High Court and by judgment dated 28 June 2019, which is
the subject of this appeal, the High Court dismissed the writ petition.
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25. The reasoning of the High Court in 2019 was as follows:
The Court held that the 2015 judgment dealt with Notification No.
25/2010-Cus., which had imposed the 16% retrospective levy up
to 15 September 2010, and that the relief granted was explicitly
limited to said period only. The High Court observed that subsequent
notifications, namely, Notification No. 91/2010-Cus. prescribing ten
paise per unit, and Notification No. 26/2012-Cus. prescribing three
paise per unit were not expressly struck down in the 2015 proceedings.
The Court stated that unless the validity of those later notifications
was specifically challenged, no refund could be ordered in respect
of amounts paid thereunder. On that basis, the High Court refused
to direct refund, and it declined to extend the protective declaration
of 2015 into the later period.
26. It is this approach which is under challenge before us.
II.
SUBMISSIONS OF THE PARTIES
27. Shri. Chidambaram, Learned senior counsel appearing for the
appellant submitted that the High Court, under the impugned
judgment, failed to give effect to its own prior declaration of law. It
was urged that the judgment of 15 July 2015 did not merely grant
a one-time relief confined to a single notification; rather, it declared,
as a matter of principle, that on the statutory framework as it then
existed, customs duty could not be levied on the clearance of
electrical energy from an SEZ to the DTA. That declaration, affirmed
by this Court, was binding on the subsequent co-ordinate Bench of
the High Court. It was submitted that there was no change in the
law or in the underlying facts between 15 September 2010 and 15
February 2016. Consequently, the same legal consequence ought
to have followed for that entire period.
28. Learned senior counsel further submitted that Section 30 of the
SEZ Act requires parity of treatment. Goods removed from an SEZ
into the DTA are to bear the same customs duty "as if imported into
India". Imported electrical energy has consistently stood at a nil rate
of customs duty. Therefore, electrical energy cleared from an SEZ
to the DTA must equally attract nil customs duty. Imposing duty on
SEZ-generated electricity while imported electricity carries no duty
produces an artificial and constitutionally suspect classification. It was
urged that such a differential treatment directly defeats the object of
the SEZ Act and violates Article 14 of the Constitution.
[2026] 2 S.C.R.
11
Adani Power Ltd. & Anr v. Union of India & Ors.
29. It was next contended for the appellant that the Union could not, by
issuing successive notifications at progressively lower rates (16%
ad valorem; thereafter ten paise per unit; thereafter three paise
per unit), achieve indirectly that which the High Court had already
pronounced to be ultra vires. The appellant referred to the doctrine
that a levy which is fundamentally unauthorised does not become
lawful merely because the rate is altered, or because it is framed
as prospective rather than retrospective. If the source is bad, every
derivative iteration is equally bad.
30. Learned senior counsel also drew attention to the manner in which
the levy was originally structured. Notification No. 25/2010-Cus.
purported, on its face, to be an "exemption" notification. In reality,
it operated as a charging instrument, introducing for the first time a
16% duty on electricity routed from the SEZ to the DTA, and doing
so with retrospective effect. It was submitted that the power conferred
by Section 25 of the Customs Act is a power to exempt goods from
duty otherwise leviable; it is not a power to create a fresh levy in
the first place. The use of an exemption notification to impose duty
was, therefore, a colourable exercise of delegated legislation and
fell foul of administrative law principles. According to the appellant,
the High Court in 2015 correctly interdicted that exercise, and the
same vice afflicts the subsequent notifications.
31. Learned senior counsel for the appellant submitted that the High
Court in 2019 erred in accepting the plea of the respondents that
no relief could be granted unless the subsequent notifications (Nos.
91/2010-Cus. and 26/2012-Cus.) were specifically impugned. It
was urged that the appellant's 2016 writ petition was not a fresh
challenge launched in isolation; it was a sequel proceeding seeking
enforcement of the 2015 declaration of law and refund of amounts
deposited under protest pursuant to a levy that had already been
held to be without authority of law. Once the foundational illegality
of the levy was judicially determined, the State could not insist that
each successive notification, though resting on the same ultra vires
premise, must be struck down afresh before relief could follow.
Such a view, it was submitted, would elevate procedural form over
substantive illegality and would compel endless cycles of litigation
on the same point.
32. It was lastly urged on behalf of the appellant that the doctrine of
finality in adjudication, and the principle that litigation must at some
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[2026] 2 S.C.R.
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stage come to an end, require that constitutional courts give effect
to their own pronouncements in substance and not permit executive
re-litigation of what has already been decided. The appellant, having
succeeded in 2015 and having seen that decision withstand challenge
before this Court, ought not to have been denied consequential relief
merely because the levy later reappeared at a different numerical rate.
33. Per contra, Shri. Raghav Shankar , the learned Additional Solicitor
General, appearing for the Union of India and the customs authorities,
supported the impugned judgment. The thrust of the Union's
submission was that the 2015 judgment of the High Court was
concerned with Notification No. 25/2010-Cus., which imposed a levy
of 16% ad valorem duty with retrospective effect up to 15 September
2010. It is further submitted that the relief granted in that case was
expressly circumscribed to that period.
34. The learned Additional Solicitor General contended that the
subsequent notifications, namely Notification No. 91/2010-Cus. (ten
paise per unit) and Notification No. 26/2012-Cus. (three paise per
unit), operated prospectively for later periods and at nominal specific
rates. According to the Union, those notifications represented a
different fiscal measure with a distinct objective: namely, to recoup,
in part, the customs duty benefit on duty-free inputs where power
so generated was supplied into the DTA. It was urged that these
later notifications were not placed under specific challenge in the
first writ petition decided in 2015.
35. The Union further submitted that even in the appellant's 2016 writ
petition, the later notifications were not, in form, separately impugned.
On that basis, it was contended that the High Court in 2019 was
correct in refusing to quash those notifications or to direct refund
of the amounts paid pursuant thereto, as no court can strike down
a statutory instrument or direct restitution on its basis unless that
instrument is first subjected to judicial review.
36. It was also submitted on behalf of Union of India that the appellant had,
for years, paid the reduced per-unit duty without protest in respect of
the post-September 2010 period, and that a belated attempt to seek
refund, after success in respect of an earlier, different notification,
ought to be viewed with circumspection.
37. It was lastly submitted that, with effect from 16 February 2016, the
policy had already been calibrated by Notification No. 9/2016-Cus.,
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Adani Power Ltd. & Anr v. Union of India & Ors.
which exempted power from large SEZ units such as the appellant's.
Thus, according to the Union, the grievance substantially stood
redressed prospectively. What remained, in its submission, was
a monetary claim for an intervening period, which the High Court
correctly declined to entertain in the absence of a specific and direct
challenge to the notifications governing that period on these grounds
he sought for rejection of the appeal.
III.
ISSUES FOR DETERMINATION
38. From the rival submissions and the record before us, the following
questions arise for consideration:
I.
Firstly, what, in law, did the Gujarat High Court decide in its
judgment dated 15 July 2015, and what is the true scope of
that decision?
II.
Secondly, whether, in the period subsequent to 15 September
2010 and prior to 16 February 2016, there was any material
changes in the statutory position or factual footing that would
justify a different result from that arrived at in 2015 judgment?
III.
Thirdly, whether the High Court, in its impugned judgment of
28 June 2019, was justified in holding that no relief could be
granted to the appellant in the absence of a specific and fresh
challenge to Notification Nos. 91/2010-Cus. and 26/2012-Cus?
IV.
Fourthly, whether, in view of the 2015 declaration of law and
its affirmation, the High Court in 2019 was at liberty, being a
co-ordinate Bench, to deny relief by narrowing the effect of the
earlier pronouncement?
V.
Fifthly, what order/direction?
IV.
ANALYSIS
39. Before proceeding with the analysis of the issues framed above, it
would be necessary to reproduce certain relevant statutory provisions
which would be necessary for the adjudication of these issues.
Accordingly we have reproduced all the relevant statutory provisions.
40. Section 12 of the Customs Act, 1962 for reference:
12. Dutiable goods.-(1) Except as otherwise provided
in this Act, or any other law for the time being in force,
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duties of customs shall be levied at such rates as may
be specified under the Customs Tariff Act, 1975 (51 of
1975), or any other law for the time being in force, on
goods imported into, or exported from, India. (2) The
provisions of sub-section (1) shall apply in respect of all
goods belonging to Government as they apply in respect
of goods not belonging to Government.
41. Section 30 of The Special Economic Zones Act, 2005 for reference:
30. Domestic clearance by Units.-Subject to the conditions
specified in the rules made by the Central Government
in this behalf,- (a) any goods removed from a Special
Economic Zone to the Domestic Tariff Area shall be
chargeable to duties of customs including anti-dumping,
countervailing and safeguard duties under the Customs
Tariff Act, 1975 (51 of 1975), where applicable, as leviable
on such goods when imported; and (b) the rate of duty
and tariff valuation, if any, applicable to goods removed
from a Special Economic Zone shall be at the rate and
tariff valuation in force as on the date of such removal,
and where such date is not ascertainable, on the date of
payment of duty.
42. Rule 47 of The Special Economic Zones Rules, 2006 for reference:
47. Sales in Domestic Tariff Area-
(1) A Unit may sell goods and services including rejects
or wastes or scraps or remnants or broken diamonds or
by products arising during the manufacturing process or
in connection therewith, in the Domestic Tariff Area on
payment of Customs duties under section 30, subject to
the following conditions, namely-
(a) Domestic Tariff Area sale under sub-rule (1), of
goods manufactured by a Unit shall be on submission
of import licence, as applicable to the import of similar
goods into India, under the provisions of the Foreign
Trade Policy:
Provided that goods imported or procured from the
Domestic Tariff Area and sold as such without being
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Adani Power Ltd. & Anr v. Union of India & Ors.
subjected to any manufacturing process shall be
subject to the provisions of the Foreign Trade Policy
as applicable to import of similar goods into India.
(b) Domestic Tariff Area sale under sub-rule (1) of
rejects or scrap or waste or remnants arising during
the manufacturing process or in connection there-with
by the Unit shall not be subject to the provisions of
the Import Trade Control (Harmonized System) of
Classification of Export and Import Items:
Provided that the Central Government may notify
restrictions, as it deems fit on all or any class of such
goods mentioned under this clause.
(2) Scrap or dust or sweeping of gold or silver or platinum
may be sent to Government of India Mint or Private Mint
from a Unit and returned in standard bars in accordance
with the procedure specified by Customs authorities or may
be sold in the Domestic Tariff Area on payment of duty on
the gold or silver or platinum content in the said scrap:
Provided that the value of samples of gold or silver
or platinum sweepings or scrap or dust taken at the
time of clearance and sent to the Government Mint
or Private Mint for assaying and assessment shall
be finalized on the basis of reports received from the
Government Mint or Private Mint, as the case may be.
(3) Surplus power generated in a Special Economic Zone's
Developer's Power Plant in the SEZ or Unit's captive
power plant or diesel generating set may be transferred to
Domestic Tariff Area on payment of duty on consumables
and raw materials used for generation of power subject
to the following conditions, namely:
(a) proposal for sale of surplus power received by
the Development Commissioner shall be examined in
consultation with the State Electricity Board, wherever
considered necessary: Provided that consultation with
State Electricity Board shall not be required for sale
of power within the same Special Economic Zone;
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(b) norms for production of a unit of power shall be
approved by the Approval Committee;
(c) sale of surplus power to other Unit or Developer
in the same or other Special Economic Zone or
to Export Oriented Unit or to Electronic Hardware
Technology Park Unit or to Software Technology Park
Unit or Bio-technology Park Unit, shall be without
payment of duty;
(d) for sale of surplus power in Domestic Tariff
Area, the Unit shall obtain permission from the
Specified Officer and the State Government authority
concerned;
(e) duty on sale of surplus power to the Domestic
Tariff Area shall be as provided for in this rule.
(4) Valuation and assessment of the goods cleared into
Domestic Tariff Area shall be made in accordance with
Customs Act and rules made there under. 160
(5) Refund, Demand, Adjudication, Review and Appeal
with regard to matters relating to authorised operations
under Special Economic Zones Act, 2005, transactions,
and goods and services related thereto shall be made by
the Jurisdictional Customs and Central Excise Authorities
in accordance with the relevant provisions contained in
the Customs Act, 1962, the Central Excise Act, 1944, and
the Finance Act, 1994 and the rules made there under or
the notifications issued there under.
43. Section 25 of The Customs Act, 1962 for reference:
25. Power to grant exemption from duty.-(1) If the Central
Government is satisfied that it is necessary in the public
interest so to do, it may, by notification in the Official
Gazette, exempt generally either absolutely or subject to
such conditions (to be fulfilled before or after clearance) as
may be specified in the notification goods of any specified
description from the whole or any part of duty of customs
leviable thereon.
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Adani Power Ltd. & Anr v. Union of India & Ors.
(2) If the Central Government is satisfied that it is necessary
in the public interest so to do, it may, may, by special order
in each case, exempt from the payment of duty, under
circumstances of an exceptional nature to be stated in
such order, any goods on which duty is leviable.
(2A) The Central Government may, if it considers it
necessary or expedient so to do for the purpose purpose of
clarifying the scope or applicability of any notification issued
under sub-section (1) or order issued under sub-section
(2), insert an explanation in such notification or order, as
the case may be, by notification in the Official Gazette, at
any time within one year of issue of the notification under
sub-section (1) or order under sub-section (2), and every
such explanation shall have effect as if it had always
been the part of the first such notification or order, as the
case may be.
(3) An exemption under sub-section (1) or sub-section
(2) in respect of any goods from any part of the duty of
customs leviable thereon (the duty of customs leviable
thereon being hereinafter referred to as the statutory
duty) may be granted by providing for the levy of a duty
on such goods at a rate expressed in a form or method
different from the form or method in which the statutory
duty is leviable and any exemption granted in relation
to any goods in the manner provided in this sub-section
shall have effect subject to the condition that the duty
of customs chargeable on such goods shall in no case
exceed the statutory duty.
Explanation.-"Form or method‖, in relation to a rate of
duty of customs, means the basis, namely, valuation,
weight, number, length, area, volume or other measure
with reference to which the duty is leviable.
(4) Every notification issued under sub-section (1) or subsection (2A) shall, unless otherwise provided, come into
force on the date of its issue by the Central Government
for publication in the Official Gazette.
* * * * *
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(6) Notwithstanding anything contained in this Act, no duty
shall be collected if the amount of duty leviable is equal
to, or less than, one hundred rupees.
(7) The mineral oils (including petroleum and natural gas)
extracted or produced in the continental continental shelf
of India or exclusive economic zone of India as referred
to in section 6 and section 7, respectively, of the Territorial
Waters, Continental Shelf, Exclusive Economic Zone and
Other Maritime Zones Act, 1976 (80 of 1976), and imported
prior to the 7th day of February, 2002 shall be deemed to
be and shall always be deemed to have been exempted
from the whole of the duties of customs leviable on such
mineral oils and accordingly, notwithstanding anything
contained in any judgment, decree or order of any court,
tribunal or other authority, no suit or other proceedings
in respect of such mineral oils shall be maintained or
continued in any court, tribunal or other authority.
(8) Notwithstanding the exemption provided under subsection (7), no refund of duties of customs paid in respect
of the mineral oils specified therein shall be made.
RE: QUESTION I - SCOPE AND EFFECT OF THE 2015 JUDGMENT
44. We turn first to the 2015 judgment. The High Court there did four things
of significance. It examined (i) the constitutional and statutory basis
of the levy; (ii) the character of the notification said to impose it; (iii)
the retrospective enforcement of that levy; and (iv) the arbitrariness
inherent in the structure of the levy.
45. On the constitutional and statutory basis, the High Court held that
the levy was ultra vires because there was, in substance, no "import
into India" that could trigger the charge under Section 12 of the
Customs Act.