Legal Issues in Planning and Professional Practice

“An Act to provide for the establishment, development and management of the Special Economic Zones for the
promotion of exports and for matters connected therewith or incidental thereto.”

China made SEZ’s a global Revolution came in

First known SEZ- Ireland & Taiwan SEZ act introduces in
concept, largest number of 2000- incorporation
Puerto Rico- 1947 followed 1960 India- 2005
SEZ’s- Shenzen 1980 of SEZ in EXIM policy

▪ Provides the legal framework for establishment of Special Economic Zones and also for units operating in such zones.

▪ Generation of additional economic activity, promotion of export of goods and services

▪ Investment from domestic and foreign sources and creation of employment opportunities.

▪ Helps in ‘Backward and Forward’ linkages of the economy.

▪ Promote exports,

▪ Taxes and duties free goods and services supported by integrated infrastructure for export production, expeditious and
single window approval mechanism and a package of incentives to attract foreign and domestic investments.
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 ▪ Procedure for making proposal to establish ▪ Establishment of Special Economic Zone and

Section 4
Section 3

Special Economic Zone: A Special Economic Zone may be

approval and authorization to operate it to,

established under this Act, either jointly or severally by the Central Developer: The developer shall submit to the Board the details of operations
Government, State Government, or any person for manufacture of goods or proposed to be undertaken in the SEZ at the time of seeking approval for setting up

rendering services or for both or as a Free Trade and Warehousing Zone. of SEZ or thereafter.

Clearance by State: while recommending a proposal for setting up of SEZ to Permission for Procurement of items under Tax: After getting approval for
the Board indicate whether the proposed area falls under reserved or authorized operation from the BOA, the developer shall make a list of items required
ecologically fragile area as may be specified by the concerned authority. duly certified by a chartered engineer and submit to the approval committee for approval.

Central Multi
Governme product
nt Zone- 1000
Free Trade Hectares
Exclusive
State – 40
SEZ for
Governme Hectares
Authority Services-
nt (Min. built
100
up 1 lac
Hectares
sqm)
Authorities Minimum
Involved Area
Bio-Tech, N.E. Hill
Approval Board of Non- areas, J & K,
Committee Approval convention Goa or UT-
al energy- 200
10 hectares Hectares
Developme Specific
nt Sector or
Commissio airport- 100
ner Hectares 02
Section 5 ▪ Guidelines for notifying Special Economic Zone : Constitution of Board of Approval:

Section 8
a) generation of additional economic activity a) The Central Government shall, within fifteen days of the commencement of
b) promotion of exports of goods and services this Act constitute a Board to be called the Board of Approval for the
c) promotion of investment from domestic and foreign sources purposes of this Act by notification.
d) creation of employment opportunities b) The Board shall consist of—
e) development of infrastructure facilities and Additional Sec.
(Central Gov.)
f) maintenance of sovereignty and integrity of India, the security of the State Chairperson
and friendly relations with foreign States.
Joint Sec. Joint Sec.
Processing and non-processing areas: (Revenue) (Revenue)
Member Member
The areas falling within the Special Economic Zones may be demarcated by the
Section 6

Central Government or any authority specified by it as- Joint Sec. (Economy/

Finance, etc.) Max. 10
(a) the processing area for setting up Units for activities, being the manufacture Member

of goods, or rendering services or

D.G. Foreign
State Gov.
Trade or
Devt. Central Gov. Dep. Sec.
(b) the area exclusively for trading or warehousing purposes or Nominee Commissioner Nominee (SEZ)
Nominee
(c) the non-processing areas for activities other than those specified under clause Member Member Member Member Member

(a) or clause (b) Duties, Powers and Functions of Board:

Section 9 & 10
• Granting of approval or rejecting proposal or modifying proposals,
Exemption From Taxes, Duties or Cess:
authorized operations, developers or units
Any goods or services exported out of, or imported into, or procured from the
Section 7

• granting of approval or rejecting of proposal for providing infrastructure

Domestic Tariff Area by,
facilities
(i) a Unit in a Special Economic Zone
• Suspension of letter of approval and transfer of Special Economic
(ii) a Developer shall subject to such terms, conditions and limitations, as may be
Zone in certain cases: if the developer is unable to perform his duties or
prescribed, be exempt from the payment of taxes, duties or cess under all
enactments specified in the First Schedule.
has violated terms and conditions. 03
 Single Window Clearance: Special Fiscal Provisions:
a) Constitution of Approval Committee:
b) Powers and Functions of Approval Committee: a) Exemptions and Concessions-

SEZ proposals approved by board of approval (BOA) at New Delhi. i) Duty of customs under the Customs Act, 1962 or Customs Tariff Act, 1975

SEZ units approved by approval committee headed by Development on goods imported and exported

commissioner locally. ii) Duty of excise under the Central Excise act, 1944 or the Central Excise
c) Setting up of Unit Tariff Act, 1985 on goods brought from Domestic Tariff Area to SEZ
d) Cancellation of letter of approval to entrepreneur
iii) Exemption from service tax of Finance Act, 1994 on taxable services
e) Setting up and operation of Offshore Banking Unit
f) Setting up of International Financial Services Centre provided to a Developer
Section 13 - 25

Section 26 - 30
g) Agency to inspect
iv) Exemptions from levy taxes on sale or purchase of goods other than
h) Single enforcement officer or agency for notified offences
i) Investigation and Inspection newspaper under the Central Sales Tax Act, 1965.
j) Designated Courts tot try suits and notified offences : State Government with b) Provisions of Income-tax Act, 1961: under Section 10AA of IT Act
concurrence of Chief Justice of High Court of that State, designate one or more exemptions are-
courts. No court, other than the court designated under sub-section (1), shall try any i) 100% for first 5 years
suit or conduct the trial of any notified offence. ii) 50% for next 5 years
k) Appeal to High Court: Any person aggrieved, by any decision or order of the court iii) 50% income on re-investment for next 5 years
designated under sub-section (1) of section 23, may file an appeal to the High c) Duration of goods or services in SEZ
Court within sixty days from the date of communication of the decision or order of d) Transfer of ownership and removal of goods
the courts so designated to him on any question of fact or law arising out of such e) Domestic clearance by Units
orders.
Development Commissioner

C.G C.G officers C.G officers S.G officers Nominee of

officers (2) Revenue (2) Economy/Finance (2) (2) developer

Approval committee
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 SEZ Authority: Miscellaneous:
a) Reference of Dispute-
a) Constitution of Authority
i) Courts try to suits in respect of any dispute between two or more
b) Special provision for transfer of officers
entrepreneurs or developers.
c) Functions of Authority
b) Limitation-
i) The development of infrastructure in the SEZ
i) In case of dispute limitation period is regulated by the provisions of the
ii) Promoting exports from the SEZ
Limitation Act, 1963
Section 31 - 41

Section 42 - 58
iii) Reviewing the functioning and performance of the SEZ
c) Applicability of provisions of this Act to existing SEZ
iv) Levy user or service charges or fees or rent for the use of properties belonging to
d) Protection of action taken in good faith
the Authority
e) Power to modify provisions of this Act or other enactments in relation to
c) Grants and loans by Central Government
SEZ. (Central government)
d) Constitution of Fund and its application:
f) Power of State Government to grant exemption.
i) All sum of money provided to Authority by Central Government including loans
g) Act to have overriding effect-
and grants.
The provisions of this Act shall have effect notwithstanding anything
ii) The fund shall be applied for, salaries, allowances, repayment of loan, expenses on
inconsistent therewith contained in any other law for the time being in force
objects, etc.
or in any instrument having effect by virtue of any law other than this Act.

As per Rule 19 (7): -Foreign Companies can also setup manufacturing units as their branch operations As per Rule 11 (8): -The Developer may allot land in the processing
in SEZ in accordance with the provisions of Foreign Exchange Management Regulation, 2000 of RBI. area on lease basis to a person desiring to create infrastructure facilities
Rule 38:- The goods or services admitted into SEZ without payment of duty may be transferred or for the use of prospective Units.
given on loan to a Unit or Developer within the same SEZ or in another SEZ. Rule 11 (9):- The Developer shall not sell the land in a SEZ

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