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

The Board has suspended a Developer's letter of approval and appointed an Administrator. Which statement is correct under Section 10 of the SEZ Act, 2005?

On suspension, or on earlier transfer to a transferee, all rights, duties, obligations and liabilities of the Developer cease absolutely, except liabilities that had accrued before that date. The Administrator's vesting lasts up to one year or until transfer, whichever is earlier.

  1. AThe Developer's liabilities that accrued before suspension cease absolutely along with all other obligations
  2. BThe Developer's rights, duties, obligations and liabilities cease from the date of suspension or earlier transfer, except liabilities accrued before that dateCorrect
  3. CThe Developer can never transfer the letter of approval once notice is given
  4. DThe Administrator's management continues for three years or until transfer, whichever is later

Explanation

Section 10(9)(c) says rights, duties, obligations and liabilities cease from the date of suspension or earlier transfer, except liabilities accrued before that date. Section 10(7) allows transfer with Board approval after notice, and Section 10(6) limits vesting to one year or transfer, whichever is earlier.

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