Adani Power wins 2026 Supreme Court customs duty relief

What the Supreme Court changed

The Supreme Court has set aside a 2019 Gujarat High Court verdict that had declined relief to Adani Power Limited on the levy of customs duty on electrical energy. The dispute relates to electricity generated at Adani Power’s plant located in a Special Economic Zone (SEZ) and supplied to the Domestic Tariff Area (DTA). A bench of Justices Aravind Kumar and N V Anjaria held that the levy for the period covered in the appeal was without authority of law.

The ruling matters because it addresses whether the executive can create a tax burden through notifications when the charging provision in the statute does not support it. The court also emphasised the need for consistent application of precedent where similarly placed parties and periods are involved. The judgment confines its findings to the specific period and statutory framework in the appeal, and it did not comment on any future legislative regime Parliament may enact.

Background: the 2015 Gujarat High Court decision

The Supreme Court noted that the Gujarat High Court, in July 2015, had struck down the levy of customs duty on electrical energy cleared by Adani Power from its SEZ unit into the DTA for the period from June 26, 2009 to September 15, 2010. That 2015 decision had provided relief for an earlier slice of time under the same broad issue.

In the present matter, Adani Power and others challenged a later Gujarat High Court division bench verdict dated June 28, 2019. The 2019 decision had declined to extend similar relief for subsequent periods. The Supreme Court held that the 2019 co-ordinate bench was bound to follow the 2015 ruling, or refer the question to a larger bench if it doubted the earlier view.

The period covered and what relief was granted

The Supreme Court 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 covered in the appeal was unsustainable. It directed the Centre and the jurisdictional customs authorities to refund the amount deposited under protest by the company towards customs duty for clearances from September 16, 2010 to February 15, 2016.

The court said the refund should be processed after due verification. It also directed that no further demand should be enforced against the appellant in respect of customs duty on electrical energy cleared from the SEZ unit to the DTA for the period covered in the appeal, since the levy was held unsustainable.

Why the court criticised the 2019 High Court approach

A key aspect of the decision is the Supreme Court’s view on judicial discipline. It said the 2019 Gujarat High Court division bench, being a co-ordinate bench, should have either followed the 2015 decision or referred the issue to a larger bench if it had doubts about correctness or applicability.

By setting aside the 2019 verdict, the Supreme Court effectively restored a uniform approach to the levy question across successive periods, until any change is made through legislative action. The court said the authorities were obliged to treat the matter as concluded and to extend the benefit of the 2015 decision uniformly to all subsequent periods until the law was altered.

Legal context cited in the broader case background

The case narrative presented alongside the report describes how the dispute arose around an attempt to impose customs duty on electricity supplied from SEZs to the DTA. It references Notification No. 25/2010-Cus. and describes a 16% ad valorem customs duty attempt in 2010 for electrical energy cleared from SEZs to the DTA.

It also outlines the broader legal proposition that customs duty requires a clear charging provision under the Customs Act, 1962, and that executive exemption notifications cannot be used to impose a new levy. The accompanying context further notes the constitutional principle that no tax can be levied without authority of law under Article 265.

Operational detail: Mundra SEZ power plant

The Supreme Court noted that Adani Power operates a coal-based thermal power plant of about 5,200 MW capacity within the Mundra SEZ in Gujarat. The dispute concerns electrical energy cleared from this SEZ unit into the DTA.

For SEZ-based power producers, the judgment is relevant because it clarifies the treatment of electricity clearances to the DTA within the statutory framework applicable to the period in question. The court also clarified it was not expressing any opinion on a future legislative regime that Parliament may enact.

Market and regulatory context around the group

Separately, the provided context also refers to other regulatory developments involving the Adani Group. It states that on 18 September, the Securities and Exchange Board of India (SEBI) dismissed allegations of stock manipulation against Gautam Adani and group companies made by US short-seller Hindenburg Research. Another section says SEBI’s final orders dismissed allegations of stock manipulation, fund diversion, and accounting irregularities, and that the order triggered a rally across key Adani stocks.

The cited price moves in early trade were: Adani Power up 8.8% to ₹686.95, Adani Enterprises up 5.1% to ₹2,526, and Adani Ports & Special Economic Zone up 1.4% to ₹1,433. The context also states SEBI concluded that allegations were not substantiated and found no evidence of fund siphoning, stock price manipulation, or misrepresentation in financial statements.

Other proceedings: CCI complaint on coal auctions

The Competition Commission of India (CCI) dismissed a complaint alleging cartelisation and bid-rigging by several groups, including Adani Enterprises, in coal block auctions conducted in 2015 and 2023. The CCI held there was no prima facie case of contravention of Section 3(3) of the Competition Act, 2002.

The CCI also rejected an application seeking condonation of delay for the 2015 auctions complaint, noting that amended Section 19(1) bars entertaining information filed beyond three years unless sufficient cause is shown. The context notes the CAG report forming the basis of allegations had been in the public domain since 2016.

Key facts snapshot

Why this judgment matters for SEZ-to-DTA taxation

Within the period covered, the Supreme Court’s direction removes an asserted customs duty burden on SEZ-generated electricity cleared to the DTA and mandates refunds of amounts paid under protest. It also reinforces that similarly situated periods should be treated consistently when a levy has already been held unlawful under the prevailing legal framework.

The judgment’s emphasis on following precedent is significant for tax administration and litigation strategy, because it reduces uncertainty that can arise when co-ordinate benches diverge without referring questions to a larger bench. At the same time, the court explicitly limited its findings to the relevant period and statutory framework, leaving space for Parliament to legislate differently in the future.

Conclusion

The Supreme Court’s ruling overturning the 2019 Gujarat High Court order grants Adani Power relief on customs duty demands for SEZ-to-DTA electricity clearances for September 2010 to February 2016 and directs refunds after verification. The court also barred further enforcement of demands for the period covered in the appeal. Any change in duty treatment going forward would depend on future legislative action, which the court said it was not commenting on.