Photo: Mint
Photo: Mint

Relief for Adani Power in additional SEZ tax case

SC upholds Gujarat HC order quashing notification levying customs duty on electrical power transferred from SEZ to domestic tariff area

New Delhi: The Supreme Court on Friday upheld a Gujarat high court decision which quashed a government notification imposing customs duty on electrical power transferred from a special economic zone (SEZ) to the domestic tariff area (DTA).

The top court was hearing a plea filed by the Union finance ministry seeking to levy customs duty on Adani Power Ltd, which operates a power plant in Mundra Port and a SEZ.

The high court in July quashed the validity of the 2010 government notification imposing 16% customs duty as being unconstitutional. The court said there was no legal basis for imposing such a tax.

Taxes levied against companies in SEZs are governed by a special law and cannot be subjected to other taxes.

Electrical energy is exempt from custom duty under the Customs Tariff Act, 1975. “Even if transferring power to a domestic zone is treated as an import to India, an exemption is given under the Customs Act," the company argued in the petition, a copy of which Mint reviewed.

Lawyer K.K. Venugopal, appearing for Adani Power, told the court that the company had already paid 27 crore in customs duty.

A bench headed by chief justice H.L. Dattu also ordered the return of a bank guarantee of 100 crore submitted by the company.