The Supreme Court on Monday directed the Union government to refund customs duty collected by the government from Adani Power on electrical energy cleared from its special economic zone (SEZ) unit to DTA (domestic tariff area), holding that the executive has no power to impose tax levy through an executive order.

A similar demand raised earlier was struck down as unconstitutional by the Gujarat high court and affirmed by the Supreme Court.

The apex court passed the judgment while allowing an appeal filed by Adani Ports challenging a Gujarat High Court judgment which had taken a contrary view.

However, the exact amount of refunds running into several hundreds of crores is not known, as the apex court did not go into the actual disputed amount due to the Adanis.

A bench of Justices Aravind Kumar and N.V. Anjaria noted that the high court in July 2015 had struck down the levy of customs duty on electrical energy cleared by the firm from its SEZ unit into the DTA from June 26, 2009, to September 15, 2010.

It said the apex court had in November 2015 declined to interfere with the high court’s 2015 verdict. It had stated that unless the validity of those later notifications was specifically challenged, no refund could be ordered in respect of amounts paid thereunder.

The bench said only the Parliament or the state legislature alone has the power to impose such a tax levy and the executive cannot impose any such tax through mere notification.

The apex court delivered its verdict on an appeal by Adani Power and others challenging a 2019 verdict of the Gujarat high court which had declined to grant relief to Adani Power.