The Government has issued the instruction on an Alternate method for transfer of space by an existing unit under Rule 74 of the SEZ.
As per existing provisions, an SEZ unit can exit from an SEZ either under the provisions of rule 74 or 74A of SEZ Rules, 2006.
The Government has received representations from stakeholders including SGJMA expressing difficulties in following the extant procedures as the existing units are not able to recover the value of their financial assets.
The SEZ Authority shall engage an independent valuer to assess the current value of the physical assets as well as financial assets, in the nature of an unutilized portion of any upfront lump sum payment, if any, in the nature of premium, advance lease rentals, etc. made by the exiting unit paid at the time of issuance of LoA.
When the existing unit identifies a potential buyer, such potential buyers shall be required to indicate the periodic lease rent for the space that they are prepared to pay to the Authority for the space being vacated by the existing unit.
The lease rent so indicated by the identified buyer shall be disclosed to all bidders as part of the e-auction process.
It is noteworthy that the e-auction terms & conditions shall also include a condition to the effect that the successful bidder in addition to other customary fixed and recurring charges, will have to separately pay to the authority, a predetermined amount based on depreciated cost/value of usable physical assets existing at the site as well as unutilized portions of financial assets, if any, as assessed by the independent valuer, which would be transferable to the previous occupant as the fair current value of assets being left off the exiting unit.
If the highest bid in the e-auction process is less than the amount indicated initially by the potential buyer identified by the existing unit, such identified buyer shall emerge successful in the e-auction process and the lease rent shall be the amount indicated initially by the potential buyer. Such an entity shall be issued an LoA by following due process. The e-auction terms and conditions shall clearly indicate the aforesaid position for the benefit of all potential bidders.
It shall be mandatory to complete the entire transfer process, including the E-auction process in a time-bound manner and in any case, within 100 days from the date of receipt of complete application from a unit expressing its intent to exit the SEZSubscribe Taxscan AdFree to view the Judgment