REPORTABLE

2026 INSC 1 IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO OF 2026 (Arising out of Special Leave Petition (Civil) No.24729/2019)

ADANI POWER LTD. & ANR …APPELLANT(S)

VERSUS UNION OF INDIA & ORS. …RESPONDENT(S)

J U D G M E N T

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 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 Signature Not Verified notifications issued by the Union. Aggrieved, the appellant has RASHI GUPTA Date: 2026.01.05 Reason: 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.

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