Gujarat High Court exempts Adani Group from paying duty retrospectively

AHMEDABAD: The Gujarat High Court today set aside a 2010 notification of the union government which levied customs duty on electricity transfer by Adani Power Limited from its Special Economic Zone at Mundra to domestic areas with retrospective effect.

"The levy of custom duty is illegal as it amounts to levying customs duty on electrical energy, which can only be levied by a substantive provision of law," reads the judgement delivered by division bench of acting Chief Justice V M Sahai and Justice R P Dholaria.

"...customs duty at the rate of 16 per cent advalorem levied by notification dated February 27, 2010 could not be imposed retrospectively with effect from June 26, 2009 and, therefore, retrospective amendment is illegal and arbitrary and deserves to be set aside," it added.

"The petitioner (Adani Power Limited) is entitled for exemption from payment of customs duty for the period 26.6.2009 to 15.9.2010 on the electricity cleared to Domestic Tariff Areas from SEZ," it said.

The customs duty could be levied only prospectively and not retrospectively, it said.

Adani Power Limited had challenged the notification which levied customs duty.

It submitted that no duty under the Customs Act can be payable for electricity energy and the notification is illegal as it sought duty retrospectively.

It also aruged that levy of customs duty for the power supplied to DTA (domestic tariff area) from SEZ amounts to double taxation as the petitioner was liable to pay duty on the raw material, namely, the coal.