Notification must be issued according to the Customs Act and properly published in the Official Gazette for an exemption, stated the Supreme Court.
The Supreme Court highlighted that to qualify for an exemption, a notification must be issued according to the Customs Act of 1962 and published in the Official Gazette. The case involved a civil appeal from a company against the Punjab State Power Corporation Limited (PSPCL), challenging the decision of the Appellate Tribunal for Electricity (APTEL). The three-Judge Bench, which included Justice B.R. Gavai, Justice Prashant Kumar Mishra, and Justice K.V. Viswanathan, stated, “It is clear that for an exemption under the Customs Act to be valid, a notification must be issued as specified by the Customs Act and published in the official gazette. It is well established that if something must be done in a specific way, it must be done that way or not at all.”
The issue at hand involved the Mega Power Policy and the impact of the 2009 Press Release. Goods imported for a Mega Power Project received customs duty exemptions under a notification from Section 25 of the Customs Act. When PSPCL started competitive bidding, the Mega Power Policy of 2006 was in effect. If a thermal plant qualified as a Mega Power Project under this policy, it could benefit from certain customs exemptions. The former Punjab State Electricity Board became PSPCL through its subsidiary and special purpose vehicle. Nabha Power Limited (NPL) issued a Request for Proposal (RFP) to secure long-term power from the station, selecting the bidder with the lowest levelized tariff for project development. L&T Power Development Limited won the bid. In December 2009, the Government of India sent a letter to all state energy secretaries regarding “Distribution reforms under the modified Mega Power Policy,” followed by an amendment to the customs notification. When a dispute arose, APTEL dismissed the appellant’s appeal and upheld the State Commission’s decision to reject the appellant’s requests. Dissatisfied, the appellant took the matter to the Supreme Court.
The Supreme Court, in this case, stated, “Given the context, the key question is: Does the press release from 01.10.2009, which announced the Union Cabinet’s approval of certain changes to the existing mega power policy, fall under the definition of ‘law’ as outlined in Clause 1.1 of the RFP/PPA? Additionally, did the legal framework change as of 01.10.2009?” The Court pointed out that ‘law’ and ‘change in law’ are distinct concepts. It emphasized that the press release clearly outlined the proposed changes and the conditions that were to be modified or removed.
“We believe that the press release did not change or repeal the existing law as of 01.10.2009. It was merely an announcement of a proposal approved by the Cabinet, which needed to be implemented after meeting the specified conditions. One of these conditions required power purchasing States to commit to distribution reforms set by the Ministry of Power. A meeting was held on 28.10.2009 to discuss this, and the States were asked to provide an undertaking in the required formats, which included four necessary distribution reform measures,” it stated.
The Court explained that the four key measures are: (a) timely release of subsidies as stated in Section 65 of the Electricity Act, 2003, (b) ensuring that distribution companies (discoms) seek approval from the State Electricity Regulatory Commission (SERC) for their annual revenue needs and tariff setting on time, (c) establishing Special Courts as outlined in the Electricity Act, 2003 to handle related cases, and (d) protecting the State Load Dispatch Centers (SLDCs). The Court questioned whether the appellant believed that the Press Release from 01.10.2009 created a new legal framework, concluding that it did not. The press release was merely a summary of a Cabinet decision and indicated a proposal meant to take effect in the future. The Court emphasized that certainty is a key aspect of law and essential to the rule of law. It noted that the press release, which summarized the Cabinet’s decision and included various conditions, did not grant any party rights under the power purchase agreement as of 01.10.2009. The press release acknowledged potential future events. A right is established only when all necessary legal conditions are met. The Court stated that a corresponding duty arises only when a right is established. It concluded that the 01.10.2009 Press Release does not constitute law under Clause 1.1 and did not address cases related to Article 77 of the Constitution of India regarding order authentication. Consequently, the Apex Court dismissed the appeal and upheld the previous judgments.
Cause Title- Nabha Power Limited & Anr. v. Punjab State Power Corporation Limited & Anr. (Neutral Citation: 2024 INSC 833)
