SEZ approved operations: later policy communication could not deny existing operation and maintenance benefits or justify recovery.

An existing SEZ unit approved as an authorised operation in the processing area remained entitled to operation and maintenance benefits under the Special Economic Zones Act, 2005 and the applicable Rules. A subsequent general policy communication could not validly alter that statutory entitlement or re-demarcate the unit as part of the non-processing area unless the Act or Rules expressly permitted such change. The recovery direction for the relevant period was therefore not traceable to the governing statutory scheme and was set aside.

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Issues: Whether the petitioner was entitled to operation and maintenance benefits under Section 26 of the Special Economic Zones Act, 2005 for the period 01.04.2015 to 15.02.2016, and whether the condition requiring refund of such benefits could be sustained.

Analysis: The petitioner's power plant had been approved as an authorised operation in the processing area under the letter of approval. The statutory scheme under Sections 4, 6, 15 and 26 of the Special Economic Zones Act, 2005, read with the relevant SEZ Rules, shows that authorised operations and the entitlement to fiscal benefits flow from the approval and the applicable legal regime, and cannot be altered by a subsequent general policy communication unless the Act or Rules authorise such alteration. The restoration of the 2009 Guidelines by the communication dated 06.04.2015 did not validly require the petitioner's existing approved unit to be re-demarcated as a non-processing area for the purpose of denying benefits already available under the approved regime. The direction to recover O&M benefits was therefore not traceable to the statutory provisions relied upon.

Conclusion: The condition directing refund of the O&M benefits for the relevant period was unsustainable and was set aside. The petitioner succeeded to that extent.

Ratio Decidendi: An existing SEZ unit operating under a valid letter of approval in the processing area cannot be denied statutory operation and maintenance benefits by a subsequent general policy communication that is not authorised by the Special Economic Zones Act, 2005 or the Rules made thereunder.

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