New Delhi: The Supreme Court on Monday allowed an appeal filed by Adani Power Limited, setting aside a 2019 Gujarat High Court order that had declined to grant the company exemption from paying customs duty on electrical energy supplied from a Special Economic Zone (SEZ) to the Domestic Tariff Area (DTA).

Adani Power operates a coal-based thermal power plant at Mundra Port and is engaged in the generation, transmission, and sale of electricity from the SEZ to the DTA. The dispute relates to the levy of customs duty on electrical energy cleared from the SEZ.

In 2010, the Centre imposed customs duty on electrical energy with retrospective effect from June 26, 2009. In a 2015 judgment, the Gujarat High Court had struck down the retrospective levy as arbitrary and illegal, holding that customs duty on electricity could only be imposed prospectively through substantive legislation.

The High Court had also ruled that Adani Power was entitled to exemption from customs duty for the period between June 26, 2009, and September 15, 2019, observing that the levy amounted to double taxation since the company had already paid duty on raw materials used for power generation.

However, after authorities imposed customs duty for a subsequent period, Adani Power again approached the Gujarat High Court. In its 2019 order, the High Court denied relief, noting that the company had not challenged the subsequent notification imposing the duty.

Challenging this decision, Adani Power moved the Supreme Court, which has now allowed the appeal, granting relief to the company.