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TMI Blog2024 (9) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... re hereby restored and will henceforth be the basis for relevant policy and operational decisions, and in effect, as per the revised guidelines, power plants can be set up by developer/co-developer in an SEZ only in the non-processing area of SEZ and will be entitled to fiscal benefits only for its initial setting up and no fiscal benefit would be admissible for its operation and maintenance in terms of Rule 27 (3) of the SEZ Rules. The second letter dated 6.4.2015 (Annexure-B) referred to the first letter dated 6.4.2015, it was stated that henceforth setting up of power plants shall be allowed only in the non-processing area of SEZs. On perusal of the second letter dated 6.4.2015 was held to be repugnant. Therefore, the impugned communication dated 6.4.2015 which stated that those captive power plants, situated in processing areas of SEZs would be demarcated as non-processing areas and the operation and maintenance benefits will were denied earlier shall thereupon be available for such power plants, is held to be arbitrary and hence, invalid. The impugned order set aside - petition allowed. - HON'BLE MR JUSTICE HEMANT CHANDANGOUDAR For the Petitioner (By Sri. T Suryanarayana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and incentives extended to the other Units operating in the SEZ. 7. The Petitioners have been procuring High Speed Diesel (HSD) from the 3rd Respondent (and 4th Respondent in case of MPPL) to operate the DG sets. In view of the exemption granted under the 2009 Guidelines, the said Respondents have supplied HSD without charging any excise duty to the Petitioners under the Central Excise Act, 1944. The Petitioner furnished necessary statutory forms (Form ARE-1) to the aforementioned Respondents for the import of materials without payment of duty and the same were endorsed by the authorized officer of the respective SEZ. 8. The 2009 Guidelines were superseded by similar guidelines issued on 21.03.2012 ('the 2012 Guidelines'). Under the 2012 Guidelines as well, there was no material change from the 2009 Guidelines on this aspect, and the above practice of duty-free supply of HSD by the 3rd (and 4th Respondent in case of MPPL) to the Petitioners' continued without any change. The 2012 guidelines gave certain relaxations to power plants set up in a processing area while limiting the fiscal benefits in units in the non-processing area to initial setting up alone. This did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri T Suryanarayana, learned Senior Counsel as follows: i) The only question that arises for consideration by this Hon'ble Court is whether the operation and maintenance benefits as envisaged under section 26 of the SEZ Act could be denied for the intervening period from 01.04.2015 to 08.05.2016? ii) The very issue in the present petitions have been examined by the Delhi High Court in Moser Baer India Ltd. v. Union of India [[2021] 133 taxmann.com 334 (Delhi)) (para 44 onwards) and the Madras High Court in DLF Utilities v. Union of India [(2021) 15 GSTR-OL 218] (paras 57, 58, 75 and 76), where the Courts have held that benefit for the interim period could not have been taken away by the 2015 communication. The Court further held that, the exemption / benefits to the SEZ are available by virtue of Section 26 (2) of the SEZ Act and the direction to re-demarcate an already set-up power plant in the 'processing area' as a unit in the 'non-processing' area under the 2015 communication (and therefore to deny such benefit) is clearly not traceable to Section 26 (2) of the SEZ Act. The Court also held that the letter dated 06.04.2015 which is a communication to the devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any event clarified, the question of the benefits being taken away does not arise. vi) It is therefore prayed that this Hon'ble Court be pleased to allow the writ petitions by declaring that the Letter of Approval dated issued by the 1st Respondent (Annexure 'H') as being effective from 01.04.2015 and directing the 1st Respondent or any person authorised by him to make appropriate endorsements on the pending ARE-1 forms issued in respect of the supply of HSD by the 3rd and 4th Respondents to the Petitioner for the period from 01.04.2015 till 08.05.2016 stating that the said HSD has been admitted in full in the SEZ and to thereafter immediately forward the so endorsed ARE-1 forms to the 4th/5th and 6th Respondent for necessary action, in the interests of justice and equity. 15. Per contra, Sri Shanthi Bhushan, learned Additional Solicitor General of India for the respondents No. 1 and 3 would submit that the exemptions, concessions and drawback incentives, etc. as provided for in Section 26 (1) of the SEZ Act, 2005 are subject to conditions prescribed, and the Central Government may prescribe the manner in which, and the terms and conditions subject to which, the exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that mere withdrawal of 2015 Guidelines did not alter the position under the Act, and therefore, the impugned Guidelines of 2015 is neither sustainable nor enforceable against the petitioners. 21. In a similar issue that arose for consideration before the High Court of Delhi, it was observed in the case of Moser Baer India Ltd. -vs- Union of India - [2021] 133 taxmann.com 334 (Delhi), that the directions contained in the covering letter dated 6.4.2015 for re-demarcation of processing area into a non-processing area, runs contrary and repugnant to aforesaid letter which was circulated under the said covering letter. 22. Perusal of the first letter dated 6.4.2015 indicated that the Guidelines of 2009 are hereby restored and will henceforth be the basis for relevant policy and operational decisions, and in effect, as per the revised guidelines, power plants can be set up by developer/co-developer in an SEZ only in the non-processing area of SEZ and will be entitled to fiscal benefits only for its initial setting up and no fiscal benefit would be admissible for its operation and maintenance in terms of Rule 27 (3) of the SEZ Rules. The second letter dated 6.4.2015 (Annexure-B) referred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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