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

Arvind Zones Ltd, an SEZ Developer, has its letter of approval suspended for one year. Which of the following consequences is consistent with the Special Economic Zones Act, 2005?

After the Board gives notice of suspension, the Developer may transfer the letter of approval with prior Board approval to an eligible person. The Developer's rights and duties then cease, but liabilities accrued before the date remain. The Administrator serves only until the year ends or transfer occurs, whichever is earlier.

  1. AThe Developer must wait until the suspension ends before it can transfer the letter of approval to any person
  2. BAfter the Board gives notice of suspension, the Developer may, with the Board's prior approval, transfer the letter of approval to a person found eligible by the Board, and the Developer's rights and duties cease from suspension or earlier transfer except for liabilities accrued before that dateCorrect
  3. COn suspension, all accrued liabilities of the Developer are extinguished along with its rights and duties
  4. DThe Administrator remains in charge for the full year even if the letter of approval is transferred earlier

Explanation

The Act permits transfer after the notice is given, with prior Board approval, to an eligible person. The Developer's rights, duties, obligations and liabilities cease from suspension or earlier transfer, except for liabilities accrued before that date. The Administrator holds the zone for up to one year or until transfer, whichever is earlier, so the other options are wrong.

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