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CMA Final · Indirect Tax Laws and Practice · Special Economic Zone Scheme

A Developer's letter of approval for an SEZ has been suspended and an Administrator appointed. Which statement is correct as per the Special Economic Zones Act, 2005?

The suspension cannot exceed one year. The zone vests in the Administrator for up to one year or until the letter of approval is transferred, whichever is earlier, so the Administrator's tenure is capped and ends at the earlier of the two events.

  1. AThe suspension may continue for up to three years while the Administrator manages the zone
  2. BThe suspension is for a period not exceeding one year, and the SEZ vests in the Administrator for up to one year or until the letter of approval is transferred, whichever is earlierCorrect
  3. CThe SEZ vests in the Administrator until the Developer's liabilities are fully paid, with no time limit
  4. DThe Administrator manages the zone for one year or until transfer, whichever is later

Explanation

The Board may suspend the approval for a period not exceeding one year. The SEZ vests in the Administrator for a period not exceeding one year or up to the date of transfer of the letter of approval, whichever is earlier. The 'whichever is later' option reverses this rule, and the Act sets no three-year or open-ended limit.

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