New Delhi: In a significant relief for Adani Power Limited, the Supreme Court on Monday (January 5) ruled that electricity supplied from a Special Economic Zone (SEZ) to the Domestic Tariff Area (DTA) cannot attract customs duty, overturning a 2019 decision of the Gujarat high court. The verdict effectively removes the levy imposed on power generated by Adani’s Mundra plant and clears the way for refunds of duties already collected.A bench of Justices Aravind Kumar and N.V. Anjaria held that the imposition of customs duty on such electricity supplies had no backing in law and that the state could not retain amounts collected under an invalid tax. The court directed the concerned Commissioner of Customs to examine Adani Power’s claims and process refunds within eight weeks, while warning officials against raising “hyper technical objections” that could dilute the relief, The Hindu reported.“Once a levy has been held to be beyond the authority of law, a constitutional court is not expected to remain a silent spectator while the very same levy is sought to be continued through successive or similar notifications. The jurisdiction of a constitutional court is remedial in nature and extends to ensuring that what has been declared unlawful is not brought back in another form,” the bench was quoted as saying by The Hindu.Adani Power runs a 4,620 MW coal-based thermal power facility inside the Mundra SEZ in Gujarat’s Kutch district. Apart from meeting the SEZ’s internal demand, the plant supplies electricity to distribution companies in Gujarat and Haryana under long-term power purchase agreements.The legal battle dates back to February 2010, when the Union government amended customs rules to levy duty on electricity supplied from SEZs to the DTA, with retrospective effect from June 2009. In the first round of litigation, the Gujarat high court in July 2015 struck down parts of the levy regime and ruled that Adani Power was exempt from paying customs duty on such supplies for a limited period between June 2009 and September 2010. The Supreme Court later declined to interfere with that ruling.After the 2015 judgment, SEZ authorities maintained that the exemption applied only to the specific time window identified by the high court, and that customs duty was payable on electricity supplied after September 2010. Adani Power challenged this interpretation before the Gujarat high court in 2016, seeking a declaration that no customs duty was payable even beyond that period, along with a refund of duties already paid.In June 2019, the high court dismissed the plea, reasoning that the earlier judgment had consciously confined the relief to a defined duration. It also held that extending the exemption could lead to a double benefit for Adani, since the company did not pay duty on inputs used for power generation either. The court further noted that later levy notifications could not be invalidated unless they were independently challenged.Setting aside that view, the Supreme Court held that there was no substantive difference between the levy invalidated in 2015 and the duty sought to be enforced subsequently for the period from September 16, 2010 to February 15, 2016.“In our view, the high court, in its judgment of 2019, fell into error in accepting the submission of the Union that the later notifications continued to operate merely because they were not specifically set aside in the decision of 2015. Once the levy itself had been held to be without authority of law, its continuance through subsequent notifications could not be sustained. The invalidity goes to the root and does not depend upon the form or sequence of the notifications,” the bench said, according to The Hindu.The apex court further clarified that when a levy has already been declared unlawful, a subsequent petition seeking implementation of that declaration cannot be treated as a fresh challenge merely because the government seeks to continue the same levy through later notifications.“We accordingly hold that 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,” the bench mentioned.