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

Under the SEZ Act, 2005, the Board suspends the letter of approval of a Developer and appoints an Administrator. For what maximum period can the suspension, and the vesting of the Zone in the Administrator, continue?

Suspension cannot exceed one year. The Zone vests in the Administrator for a period not exceeding one year or until the letter of approval is transferred, whichever is earlier. Hence the option of one year or earlier transfer is correct.

  1. ANot exceeding six months in all cases
  2. BNot exceeding one year, or until the letter of approval is transferred if that is earlierCorrect
  3. CNot exceeding three years, or until the transfer, whichever is later
  4. DIndefinitely until the Developer repays all dues

Explanation

Section 10(1) limits suspension to a period not exceeding one year. Section 10(6) vests the Zone 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 the rule.

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