Section 16 of The Special Economic Zones Act, 2005
- (1)The Approval Committee may, at any time, if it has any reason or cause to believe that the entrepreneur has persistently contravened any of the terms and conditions or its obligations subject to which the letter of approval was granted to the entrepreneur, cancel the letter of approval: Provided that no such letter of approval shall be cancelled unless the entrepreneur has been afforded a reasonable opportunity of being heard.
- (2)Where the letter of approval has been cancelled under sub-section (1), the Unit shall not, from the date of such cancellation, be entitled to any exemption, concession, benefit or deduction available to it, being a Unit, under this Act.
- (3)Without prejudice to the provisions of this Act, the entrepreneur whose letter of approval has been cancelled under sub-section (1), shall remit, the exemption, concession, drawback and any other benefit availed by him in respect of the capital goods, finished goods lying in stock and unutilised raw materials relatable to his Unit, in such manner as may be prescribed.
- (4)Any person aggrieved by an order of the Approval Committee made under sub-section (1), may prefer an appeal to the Board within such time as may be prescribed.
- (5)No appeal shall be admitted if it is preferred after the expiry of the time prescribed therefor: Provided that an appeal may be admitted after the expiry of the period prescribed therefor if the appellant satisfies the Board that he had sufficient cause for not preferring the appeal within the prescribed time.
- (6)Every appeal made under sub-section (4) shall be in such form and shall be accompanied by a copy of the order appealed against and by such fees as may be prescribed.
- (7)The procedure for disposing of an appeal shall be such as may be prescribed: Provided that before disposing of an appeal, the appellant shall be given a reasonable opportunity of being heard.
Summary
- The Approval Committee has the power to cancel a business unit's Letter of Approval at any time.
- Cancellation is triggered if the committee believes the entrepreneur has persistently violated the terms, conditions, or obligations of the approval.
- The committee must give the entrepreneur a fair hearing before canceling the approval.
- Once canceled, the unit immediately loses all tax exemptions, concessions, and other financial benefits provided under the Act.
- The entrepreneur must pay back (remit) all duty exemptions and benefits claimed on capital equipment, finished goods in stock, and unused raw materials.
- If an entrepreneur disagrees with the cancellation, they can appeal the decision to the Board of Approval.
Practical examples
FAQ
1. On what grounds can the Approval Committee cancel a unit's Letter of Approval?
The committee can cancel the approval if it has reason to believe that the entrepreneur has persistently contravened any of the terms, conditions, or obligations of the approval.
2. Can the committee cancel my approval without letting me explain?
No, the law states that no Letter of Approval can be cancelled unless the entrepreneur has been given a reasonable opportunity of being heard.
3. What happens to my tax-free stock if my approval is cancelled?
You must pay back (remit) all the exemptions, concessions, drawbacks, and benefits you received for your capital goods, finished goods in stock, and unused raw materials.
4. Can I appeal against a cancellation order?
Yes, you can appeal the cancellation order to the Board of Approval within the prescribed time limit.
Test yourself
Q1.Under Section 16 of The Special Economic Zones Act, 2005, what is the consequence of a Letter of Approval being cancelled?
Q2.Under Section 16 of The Special Economic Zones Act, 2005, which of the following must an entrepreneur pay back (remit) if their approval is cancelled?
Q3.Under Section 16 of The Special Economic Zones Act, 2005, who is authorized to cancel an entrepreneur's Letter of Approval?
Q4.Under Section 16 of The Special Economic Zones Act, 2005, what legal remedy does an entrepreneur have if their Letter of Approval is cancelled?