SC strikes down SEZ power duty, Adani Power gets relief
05 Jan 2026

The Supreme Court of India has ruled that customs duty cannot be levied on electricity supplied from a Special Economic Zone (SEZ) to the domestic market.

The ruling comes as a major relief for Adani Power, which was previously liable to pay such duties.

The court overturned a 2019 Gujarat High Court judgment and held that the levy lacked legal authority.

Court orders refund of customs duty
Refund directive

The Supreme Court also ordered customs authorities to refund the duty collected from Adani Power.

It directed the jurisdictional Commissioner of Customs to verify and process refunds within eight weeks of its judgment.

The ruling comes as a major boost for Adani Power, which operates a coal-based thermal power plant in Gujarat's Kutch district.

Background of the customs duty dispute
Dispute origins

The customs duty dispute dates back to February 2010 when the Central government amended customs rules to impose a levy on electricity supplied from an SEZ to the Domestic Tariff Area (DTA).

The authorities also sought to apply this levy retrospectively from June 2009.

Adani Power challenged this move before the Gujarat High Court, which partially struck down the duty framework in July 2015.

SEZ authorities' interpretation of the 2015 judgment
Post-judgment stance

After the 2015 judgment, SEZ authorities interpreted that the exemption was time-bound and customs duty was payable on electricity supplied after September 2010.

Customs authorities continued to raise demands based on subsequent notifications issued in 2010 and 2012, which reduced the duty rate.

Adani Power stopped paying these duties and sought refunds, arguing that once a levy is found illegal, later notifications cannot revive it.

Gujarat High Court's rejection of Adani Power's plea
Plea rejection

In June 2019, the Gujarat High Court rejected Adani Power's plea, ruling that the 2015 judgment had limited the exemption to a specific period and could not be extended through a fresh petition.

The court said a wider exemption could give Adani Power an unfair advantage and held that duty exemptions for imported electricity could not automatically apply to power generated in an Indian SEZ.

Supreme Court's ruling on Adani Power's challenge
SC verdict

Adani Power challenged the 2019 decision before the Supreme Court, which has now overturned that view.

The bench said once a levy is held to be illegal, the government cannot retain money collected under it, making refunds a necessary consequence.

This ruling comes as Adani Power steps up its expansion plans across India.