There Must Be Notification Issued As Per Customs Act & Duly Published In Official Gazette For An Exemption: SC

The Supreme Court emphasised that for an exemption, there must be a notification issued as per the Customs Act, 1962 and duly published in the Official Gazette.

The Court was dealing with a civil appeal preferred by a company against Punjab State Power Corporation Limited (PSPCL) and assailed the judgment of the Appellate Tribunal for Electricity (APTEL).

The three-Judge Bench comprising Justice B.R. Gavai, Justice Prashant Kumar Mishra, and Justice K.V. Viswanathan said, “It will be very clear that for an exemption under the Customs Act to operate thereon there has to be a notification issued in the manner provided by the Customs Act and duly published in the official gazette. It is so well settled that if a certain thing has to be done in a certain manner, it shall be done in that manner or not at all.”

Senior Advocates C.S. Vaidyanathan, NS Nadkarni, Dama Sheshadari Naidu, and Arvind Datar represented the appellants while Senior Advocate M.G. Ramachandran represented the respondents.

In this case, the issue concerned the aspect of Mega Power Policy and the effect of the Press Release of 2009. The goods imported for setting up a Mega Power Project had, under a notification issued under Section 25 of the Customs Act, been granted certain exemptions from customs duty. When competitive bidding was initiated by the respondent/PSPCL, what was in vogue was the Mega Power Policy, 2006. If a thermal plant was covered as a Mega Power Project under the said Policy, it was entitled to the benefit of certain exemptions under the customs notification. Thereafter, the erstwhile Punjab State Electricity Board was known as PSPCL through its then wholly owned subsidiary and a special purpose vehicle. The appellant, Nabha Power Limited (NPL) issued a Request for Proposal (RFP) for procurement of power on long-term basis from the power station.

The bidder with the lowest levelized tariff was to be selected for the development of the project. L&T Power Development Limited emerged as the successful bidder. Certain rapid developments happened in December 2009 and the Government of India addressed a letter to all the Principal Secretary/Secretary Energy of all the States/Union Territories under the subject “Distribution reforms under the modified Mega Power Policy”. After that, an amendment to the customs notification was issued. When the dispute arose, the APTEL dismissed the appeal of the appellant and confirmed the order of the State Commission by which it rejected the prayers of the appellant. Being aggrieved, the appellant approached the Apex Court.

The Supreme Court in the above context of the case, observed, “In the above background, the question that arises for consideration is: Whether the press release of 01.10.2009 announcing the decision of the Union Cabinet about approval of certain modifications envisaged in the then existing mega power policy, is covered within the meaning of the expression “law as defined in Clause 1.1 of the RFP/PPA and if so did the extant legal regime as on 01.10.2009 undergo a change from the said date?”

The Court remarked that ‘law’ is one thing and ‘change in law’ is another, in the sense that the two are two different concepts. It added that the press release clearly mentioned as to what was envisaged and the conditions that were to be replaced and removed.

“In our considered opinion, the press release did not alter/amend/repeal the existing law as on 01.10.2009. It was at best the announcement of a proposal approved by the Cabinet which had to be given shape after fulfilment of the conditions mentioned therein. Some of the conditions were that the power purchasing States were to undertake to carry out distribution reforms as laid down by the Ministry of Power and admittedly in that regard there was a meeting held on 28.10.2009; an undertaking was sought from the States in the prescribed formats and the four distribution reform measures required to be undertaken were part of the undertaking”, it noted.

Furthermore, the Court elucidated that those four measures are (a) timely release of subsidy as per Section 65 of the Electricity Act, 2003 (b) Ensure that discoms will approach SERC for approval of annual revenue requirement/tariff determination in time according to SERC regulations (c) Setting up of Special Courts as provided in the Electricity Act, 2003 to tackle the related cases and (d) ring fencing of SLDCs.

“Could the appellant has assumed that the Press Release of 01.10.2009 ordained a new legal regime? We think not and we hold accordingly. The press release is a summary of the Cabinet decision. Even the press release makes it clear that it was a proposal that was envisaged and which was to come into force in future”, it observed.

The Court said that, certainty is the hallmark of law which is one of its essential attributes and an integral component of the rule of law.

“The press release summarizing the Cabinet decision and beset with several conditions created no vested rights on any party to the power purchase agreement vis-a-vis the other party on 01.10.2009. In fact, the press release itself contemplated certain contingencies. A right vests when all the facts have occurred which must by law occur in order for the person in question to have the right”, it also observed.

The Court added that, it is only when the right vests will there be a corelative duty on the other as far as nature of the right involved in this case is concerned.

“… we are otherwise convinced for the reason set out above that the 01.10.2009 Press Release is not law under Clause 1.1. Equally, for that reason, we have not discussed the cases on Article 77 of the Constitution of India, dealing with authentication of orders”, it concluded.

Accordingly, the Apex Court dismissed the appeal and refused to interfere with the concurrent judgments.

Cause Title- Nabha Power Limited & Anr. v. Punjab State Power Corporation Limited & Anr. (Neutral Citation: 2024 INSC 833)

Appearance:

Appellants: Senior Advocates C.S. Vaidyanathan, ANS Nadkarni, Dama Sheshadari Naidu, Arvind Datar, AORs E.C. Agrawala, Bharat Vinod Sharma, Advocates Mahesh Agarwal, Venkatesh, Rohan Talwar, Shashwat Singh, Avishkar Singhvi, Priya Dhankar, Keshav Dhingra, Salvador Santosh Rebello, Deepti Arya, Arzu Paul, Naved Ahmed, Nikunj Bhatnagar, Adarsh Singh, Rishikesh Haridas, Himanshi Nagpal, Manisha Gupta, Siddharth Nigotia, Yanthanshan, Siddharth Nigotia, Vishrov Mukerjee, Pratyush Singh, Yashaswi Kant, Girik Bhalla, Raghav Malhotra, and Juhisenguttuvan.

Respondents: Senior Advocate M.G. Ramachandran, ASG Balbir Singh, AORs K. V. Mohan, Anuradha Mutatkar, Sunieta Ojha Advocates Poorva Saigal, K.V. Mohan, Shubham Arya, Pallavi Saigal, Devyanshu Sharma, Shirin Gupta, Sakesh Kumar, Gitanjali N Sharma, Alpha M Prasad, and Gargi Kumar.

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