N. Kumar, J.

This appeal is filed challenging the order passed by the learned Single Judge, who declined to interfere with the order of the State Government dated 29.10.2009 withdrawing the exemption granted earlier in respect of 1% of Labour Welfare Cess on construction cost incurred by a developer/Co-developer under "State Policy for Special Economic Zones – 2009".

2. The petitioner-appellant is a specialized organization engaged in constructing, developing and maintaining Technical/IT parks with self contained infrastructural facilities in Special Economic Zones (SEZ), KIADB. The State Authority has allotted the land to the petitioner for development of Industries in the State of Karnataka. The project of the appellant-petitioner has been approved in the State High Level Committee for establishing comprehensive Information Technology Park with allied services. The petitioner directly and indirectly employs labour force and has availed the benefit extended in the guidelines issued by State of Karnataka. The petitioner is thus a beneficiary under the Special Economic Zones Act, 2005 and Rules 2006 for the purpose of serving and promoting the interest of State of Karnataka as IT Park developer. It had availed, in particular, the benefit of exemption of 1% labour welfare cess. The said benefit is traceable to State Policy for SEZ 2009 particularly in Clause 4 under heading "Labour related issues" and Clause 5 under heading 'Fiscal benefits'. In Clause 5, 'fiscal benefits' - sub-para (d) relates to exemption of 1% labour welfare cess on construction cost incurred by Developer/Co-developer being a public utility service fictionally.

3. The case of the petitioner is the power to exempt appears in part III of State Policy under the heading "Policy Measures". When the State Government proclaimed its State Policy, 2009, it held out and assured all developers and co-developers, including the appellant herein that certain specific fiscal benefits as well as benefit in regard to labour related issues are extended without any outer limit of time and the developers of IT Parks could act on such representation. The appellant-petitioner being a developer of such IT park believed in the said representation, acted on the same and arranged its affairs by making substantial progress in implementing State Government's policy of SEZ as public utility service. The appellant-petitioner thus has acquired substantial rights, privileges and special benefits under State Policy for SEZs 2009 proclaimed and brought into effect by State of Karnataka. The State Policy is duly authorized by Government of India and backed by power under Rules 2006 read with Section 50 of the SEZ Act, 2005. On 29.12.2009, the Government of Karnataka has withdrawn exemption of 1% Labour Welfare Cess on construction cost incurred by the developer/Co-developer with immediate effect making it appear that this order is issued with concurrence of cabinet from 22.10.2009. Therefore, aggrieved by the same, the petitioner preferred a writ petition before the learned Single Judge challenging the validity of the State Government order. The learned Single Judge, after considering the contentions raised by the petitioner held that the State Government and the State Legislature has no power to exempt levy of Labour Welfare Cess payable under Section 3 of the Building and Other Construction Workers' Welfare Cess Act, 1996 which is a Central Act. The exemption offered was beyond the competence of the State Government. Therefore, he did not find any legal infirmity in the order of the State Government, withdrawing the exemption offered. Hence, the writ petition was dismissed. Aggrieved by the said order, the present appeal is filed.

4. Sri. S.P. Shankar, learned Senior Counsel appearing for the appellant-petitioner assailing the impugned orders contend that the Parliament has enacted the Special Economic Zones Act, 2005 with a view to providing an internationally competitive and hassle fr