Delegated taxation limits under SEZ law: a rule cannot impose export duty without express statutory authority.

The Special Economic Zones Act, 2005 does not contain a charging provision authorising export duty on supplies from the Domestic Tariff Area to a Special Economic Zone. Section 30 addresses only goods moving from a Special Economic Zone to the Domestic Tariff Area, while section 55 permits rule-making only to carry out the Act and prescribe exemption terms, not to create a substantive levy. A delegated rule cannot impose a fiscal burden without clear legislative authority, and the legal fiction in section 53 cannot be extended beyond its statutory purpose. The challenged proviso to Rule 27(1) of the SEZ Rules was therefore held ultra vires the Act and ineffective to sustain export duty on such supplies.

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Issues: Whether the 5th proviso to sub-rule (1) of Rule 27 of the Special Economic Zones Rules, 2006, which subjects supplies from the Domestic Tariff Area to Special Economic Zones to export duty, is ultra vires the Special Economic Zones Act, 2005.

Analysis: The statutory scheme of the Special Economic Zones Act, 2005 treats export and import through defined legal fictions and grants exemptions, but it does not create a charging provision for levy of customs or export duty on procurement from the Domestic Tariff Area to a Special Economic Zone. Section 30 of the Act expressly deals only with goods moving from a Special Economic Zone to the Domestic Tariff Area. Section 55 authorises rule-making to carry out the Act and to prescribe terms for exemption, but does not confer power to create a substantive levy. A delegated rule cannot impose a fiscal burden without clear legislative authority, and the legal fiction in section 53 cannot be extended beyond its limited statutory purpose. The omission of the earlier Chapter XA arrangement, including section 76F, further supports the conclusion that no such levy was intended under the Act.

Conclusion: The impugned proviso is ultra vires the Special Economic Zones Act, 2005 and cannot sustain a levy of export duty on supplies from the Domestic Tariff Area to a Special Economic Zone.

Ratio Decidendi: A delegated rule cannot impose a tax or duty in the absence of an express charging provision or clear statutory authority, and a statutory legal fiction cannot be expanded beyond the purpose for which it was created.

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