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

The Central Government proposes a notification under section 49 of the SEZ Act, 2005 to exempt all SEZs from a provision of a Central Act relating to provident funds of workers. Another proposed notification would exempt SEZs from a provision of the Act on customs procedure. Which conclusion is correct?

The notification touching provident funds is barred by the proviso to section 49, which protects labour matters, while a customs provision can be disapplied or modified for SEZs through a notification, with the draft laid before both Houses of Parliament for thirty days.

  1. ABoth can be issued, as section 49 covers any Central Act
  2. BThe provident fund one cannot modify the labour law matter under the proviso, while a customs provision can be modified or disapplied subject to the Parliament laying procedureCorrect
  3. CNeither can be issued, as section 49 applies only to the SEZ Act itself
  4. DThe customs one is barred, but the provident fund one is allowed

Explanation

Section 49(1) lets the Government direct that provisions of any Central Act do not apply or apply with modifications to SEZs. The proviso, however, bars modifications relating to trade unions, labour disputes, labour welfare, provident funds and similar matters. A customs provision is not within the proviso, so it may be modified, with the draft laid before Parliament for thirty days.

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