Govt mulls denotification norms for SEZs

The government is looking at formulating new rules for denotification of special economic zones (SEZs) in the wake of several developers, including realty major DLF, approaching the commerce ministry for surrendering their tax-free enclaves.

“The Department of Commerce will .... propose suitable provisions in the Act/Rules for denotifying SEZ,” a source said. The Department of Revenue told the Board of Approval (BoA), which took up the request of DLF for de-notification of its four SEZs, that “there is no such provision in SEZ scheme for de-notification of SEZs even if the developer has undertaken to pay back of duty benefit taken and that Board may like to decide the issue accordingly,” the source added.

However, the Ministry of Law opined that though there is no specific provision in the SEZ Act and Rules, the power to notify includes power to de-notify also, sources said.

Industry experts said that the SEZs, which are finding it difficult to continue, should be allowed to quit.

As there are no specific provisions for de-notifying SEZs in the SEZ Act 2005, suitable provisions should be made, sources added.

The BoA headed by Commerce Secretary G K Pillai had, however, given an in-principle nod to DLF for de-notification of its ITeS tax-free zones in Gujarat, Haryana, Orissa and West Bengal.

The government will formally de-notify the SEZs only after the developer returns benefits including Customs, excise, income-tax that have been availed by it. So far, 568 formal approvals have been granted for setting up SEZs, out of which 315 have been notified.

Total export from SEZs stood at Rs 99,689 crore in 2008-09, an increase of about 50 per cent over the previous fiscal.