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IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
M/s Moser Baer India Ltd. – Petitioner
Versus
Union of India and Another – Respondents
W.P. (C) No. 662 of 2017
Decided On : 25-10-2021
Constitution of India - Article 226 - Special Economic Zones Act, 2005 - Section 26 - Special Economic Zone Rules, 2006 - Rule 47(3)(c) - Expression authorised operations - Word Developer - (a) whether the petitioner is entitled to O&M benefits (fiscal benefits covered under Section 26 of the SEZ Act in respect of maintenance and duty free import to raw materials and consumables for generation of power) for the period and (b) whether the condition that no duty free benefits for transfers to EOU is contrary to the SEZ Act and the Rules made thereunder - Whether the operations carried out by the petitioner cease to be “authorised operations” by virtue of the letter dated 06.04.2015, whereby the 2012 Guidelines were superseded.
Finding of the Court:
Expression “authorised operations” is defined under Section 2(c) of the SEZ Act to mean “operations which may be authorised under sub-section (2) of section 4 and sub-section (9) of section 15.” Section 4(2) of the SEZ Act empowers the Board of Approval to authorize the Developer to undertake the operations in an SEZ as may be authorized by the Government - Central Government can introduce terms and conditions by notifying Rules or issuing guidelines in terms of which an approval may be granted - one of the principal difference between the 2009 Guidelines and the 2012 Guidelines is that, whereas under the 2009 Guidelines, a power plant set up by a developer/co-developer as a part of infrastructure facility was required to be placed only in a non processing Area of the SEZ and would not be entitled to any O&M benefits - Board of Approval would “in exercise of its powers or performance of its functions” be bound by the directions of the Central Government on the questions of policy under the SEZ Act. Clearly, if the policy of the Central Government is not to permit power plants to be set up in processing areas, the Board of Approval is required to ensure that no letter of approval is granted to a unit or a developer to do so. However, that does not mean that the Board of Approval is required to proceed to cancel an existing letter of approval even though there is no default on the part of the entrepreneur in complying with the terms and conditions or its obligations subject to which, the letter of approval was granted to him. As noticed above, the letter of approval granted to an entrepreneur can be cancelled if the conditions as stipulated under Section 16(1) of the SEZ Act are met and not otherwise. The letter of approval granted to a developer for setting up an SEZ may also be suspended in terms of Section 10 of the SEZ Act.
Result: Disposed of.
JUDGMENT :
VIBHU BAKHRU, J.
1. The petitioner has filed the present petition under Article 226 of the Constitution of India impugning an order dated 28.12.2016 passed by the Board of Approval, whereby the petitioner’s appeal against an order dated 18.04.2016 passed by the Unit Approval Committee, NOIDA SEZ was rejected. The petitioner also prays that the petitioner may be allowed benefits under Section 26 of the Special Economic Zones Act, 2005 (hereafter ‘the SEZ Act’) in respect of maintenance and duty free imports of raw materials and consumables for operation and maintenance of the power plant (hereafter ‘O&M benefits’). In addition, the petitioner also prays that it should be allowed duty free transfer of surplus power generated by it to the Export Oriented Units (hereafter ‘EOU’).
Factual Context
2. The petitioner is a company, inter-alia, engaged in generation of electricity, which is captively consumed and also supplied to other units in the Special Economic Zone (SEZ Units). The petitioner had submitted its proposal for seeking approval for its power generating unit in MBIL-SEZ. The said proposal was accepted and by a Letter of Approval dated 08.10.2009 (hereafter ‘the LoA’) the Development Commissioner, Noida SEZ (Approval Committee) approved the same and extended all facilities and entitlements, as admissible to a unit in the Special Economic Zone (SEZ) subject to the terms of the SEZ Act and the Rules made thereunder, for undertaking “Authorised Operations.” The said approval was subject to certain terms and conditions as stipulated in the LoA including that, the approval was valid for a period of one year from the date of issue, within which the petitioner was obliged to implement the project and commence production. It was also stipulated that the LoA would be valid for a period of five years from the date of commencement of production. It is relevant to note that the petitioner’s proposal was for it to be treated as an SEZ unit in terms of the Guidelines issued by the Department of Commerce by its letter dated 27.02.2009 (hereafter referred to as ‘the 2009 Guidelines’).
3. The petitioner continued to operate its power generation unit in the SEZ for the period 08.10.2009 to 20.03.2012. During this period, it was granted and availed all benefits under Section 26 of the SEZ Act including O&M benefits in terms of the 2009 Guidelines.
4. On 21.03.2012, Government of India, Ministry of Commerce and Industry, Department of Commerce issued fresh guidelines for power generation in SEZ (hereafter referred to as the ‘2012 Guidelines’), which superseded the 2009 Guidelines. The said Guidelines continued till 31.03.2015 and during this period the petitioner continued to operate its unit and availed O&M benefits as available under Section 26 of the SEZ Act. In the meanwhile, with the expiry of five years, the LoA expired and in terms of the letter dated 04.12.2014, the LoA was renewed for a further period of five years, that is, till 08.10.2019.
5. Thereafter, by a letter dated 06.04.2015 (P6/3/2006-SEZ), Department of Commerce, Government of India communicated its decision to withdraw the 2012 Guidelines with immediate effect (that is, with effect from 01.04.2015) and restore the 2009 Guidelines (Guidelines issued in terms of the letter dated 27.02.2009). The said letter expressly stated that the 2009 Guidelines would be the basis for the relevant policy and operational decisions. A copy of the said letter is annexed as Annexure P-8 to the petition, and it is not disputed that the same contains a typographical error inasmuch as the letter dated 27.02.2009 (the 2009 Guidelines) is referred to as a letter dated 27.02.2012.
6. The Government of India also issued another letter dated 06.04.2015 addressed to all Development Commissioners, Special Economic Zones informing them that, henceforth, setting up of power plant shall be allowed only in non-processing area of SEZs. It further stated that processing power plants presently situated
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