Can the Law Change Merely With a Change of Bench? Supreme Court Answers

Certainty and consistency form the bedrock of any credible legal system. Courts are expected not only to decide disputes but also to ensure that the law remains stable, predictable, and coherent. When different Benches of the same court take conflicting views on the same legal issue, public confidence in the judiciary is inevitably shaken.

This concern becomes particularly acute when a later coordinate Bench departs from an earlier decision without referring the matter to a larger Bench. Such judicial deviation raises a fundamental constitutional question: Can the law change merely because the Bench has changed?

This question received a definitive answer from the Supreme Court of India in its judgment dated 5 January 2026 in Adani Power Ltd. & Anr. v. Union of India & Ors. (2026 INSC 1). The Court categorically held that the law cannot change with a change of Bench, reaffirming the binding force of precedent, the discipline of coordinate Benches, and the constitutional limits on delegated legislation.

Factual Background of the Dispute

The controversy arose from the levy of customs duty on electrical energy generated in a Special Economic Zone (SEZ) and supplied to the Domestic Tariff Area (DTA).

Adani Power Limited operated a large coal-based thermal power plant within the Mundra SEZ in Gujarat. A substantial portion of the electricity generated was supplied to consumers in the DTA. Under Section 30 of the SEZ Act, 2005, goods cleared from an SEZ to the DTA are chargeable to customs duty “as if imported into India.”

Historically, imported electrical energy attracted nil customs duty. Accordingly, electricity supplied from SEZs to the DTA also did not attract customs duty, maintaining statutory parity.

This position changed when the Union Government issued a series of customs notifications beginning in 2010. Notification No. 25/2010-Cus imposed a 16 percent ad valorem customs duty, retrospectively. This was later replaced by Notification No. 91/2010-Cus prescribing ten paise per unit, and Notification No. 26/2012-Cus prescribing three paise per unit.

The 2015 Gujarat High Court Judgment

In 2015, a Division Bench of the Gujarat High Court struck down the levy in Adani Power Ltd. v. Union of India. The High Court held:

1. Absence of a taxable event: Section 12 of the Customs Act levies duty on goods “imported into India.” Electricity generated within India and supplied from an SEZ to the DTA does not amount to import.
2. Misuse of exemption power: Section 25 of the Customs Act empowers the Government to grant exemptions, not to impose a tax. Using an exemption notification to introduce a levy was held to be a colourable exercise of delegated legislation.
3. Violation of Article 265 of the Constitution: Retrospective taxation through subordinate legislation was held to be unconstitutional.
4. Arbitrariness and double burden: The SEZ Rules already neutralised duty benefits on inputs used to generate electricity. Imposing customs duty again on electricity supplied to the DTA resulted in double taxation.

The judgment was affirmed by the Supreme Court, which dismissed the Union’s appeal and review petition. The declaration of law thus attained finality.

The 2019 Judgment and the Judicial Conflict

Despite the 2015 ruling, when Adani Power sought a refund of duties paid under later notifications for the period between 2010 and 2016, another Division Bench of the Gujarat High Court in 2019 denied relief.

The 2019 Bench reasoned that the 2015 judgment was confined only to Notification No. 25/2010-Cus and the period up to 15 September 2010. Since later notifications were not expressly challenged, the Court declined to grant relief.

This approach created a direct conflict between coordinate Benches of the same High Court.

Supreme Court’s Central Holding: Law Does Not Change With the Bench

The Supreme Court unequivocally rejected the approach of the 2019 Bench and held that a coordinate Bench is bound by an earlier decision on a question of law.

Binding Nature of Coordinate Bench Decisions

Relying on settled precedent, the Court reiterated that when a coordinate Bench disagrees with an earlier view, the only lawful course is to refer the matter to a larger Bench.

The Court expressly relied on State of Uttar Pradesh v. Ajay Kumar Sharma (2016) 15 SCC 289, where it was held that judicial discipline mandates adherence to coordinate Bench decisions, and deviation without reference to a larger Bench is impermissible.

The Supreme Court emphasised that judicial discipline is not a matter of courtesy but a constitutional necessity ensuring certainty and coherence in law.

Ratio Decidendi Cannot Be Artificially Confined

The Court rejected the argument that the 2015 judgment was notification-specific. It held that the earlier ruling declared the absence of legislative authority to levy customs duty on SEZ-to-DTA electricity itself.

The Court observed that:

• A declaration that a levy lacks a charging provision goes to the root of jurisdiction.
• Merely altering the rate of duty or issuing fresh notifications does not cure a foundational illegality.
• The essence of the 2015 judgment was structural, not temporal.

Delegated Legislation and Colourable Exercise of Power

The judgment devotes significant attention to the misuse of delegated powers.

The Court reaffirmed that:

• Section 25 of the Customs Act authorises exemption from an existing levy.
• It does not empower the executive to create a levy where none exists.
• What cannot be done directly cannot be done indirectly.

This principle aligns with long-standing jurisprudence on delegated legislation and constitutional taxation, reinforcing that executive notifications cannot usurp essential legislative functions.

The Supreme Court thus held that the ratio decidendi applied to all subsequent periods governed by the same statutory framework.

No Requirement of Repeated Challenges to Identical Illegality

The Supreme Court firmly rejected the Union’s contention that each subsequent notification had to be separately challenged.

The Court held that:

• Once the foundation of a levy is declared ultra vires, all derivative attempts to enforce it are equally unenforceable.
• Constitutional courts are empowered to ensure meaningful implementation of their judgments.
• Insisting on repetitive litigation elevates procedural form over substantive justice.

This approach aligns with the principle that courts must prevent the reintroduction of invalidated levies under new guises.

Executive Obligation to Respect Final Judicial Declarations

A notable aspect of the judgment is its emphasis on executive accountability.

The Court observed that once a High Court judgment attains finality, especially after the Supreme Court declines interference, the administration is constitutionally bound to conform its conduct to that declaration.

The Court invoked the maxim interest reipublicae ut sit finis litium, holding that public interest demands finality in litigation. Persistent enforcement of a struck-down levy undermines the rule of law and burdens both courts and citizens.

Relief Granted by the Supreme Court

The Supreme Court:

• Set aside the Gujarat High Court judgment dated 28 June 2019.
• Declared the levy of customs duty on SEZ-to-DTA electricity for the period 2010–2016 to be without authority of law.
• Directed refund of all amounts collected under protest, without interest.
• Prohibited any further demands for the same period.

Broader Constitutional Significance

1. Reinforcement of Stare Decisis: The judgment fortifies the doctrine of precedent as an institutional safeguard against inconsistency.
2. Limits on Executive Overreach: It draws a clear constitutional boundary around delegated legislation, particularly in taxation.
3. Protection Against Endless Litigation: Citizens are not required to challenge identical illegality repeatedly.
4. Institutional Integrity of the Judiciary: By holding that law does not change with the Bench, the Court preserves public confidence in judicial neutrality and predictability.

Conclusion

The Supreme Court makes it clear that the law cannot change simply because a different Bench hears the case.

A coordinate Bench is bound by earlier decisions on questions of law. If it doubts their correctness, the only lawful course is reference to a larger Bench. Any other approach undermines judicial discipline, certainty, and the rule of law.

Through this judgment, the Supreme Court has not only resolved a complex fiscal dispute but has also reaffirmed a foundational constitutional principle. Judicial consistency is not optional. It is essential to the legitimacy of adjudication itself.