Date:05/12/2008 URL: http://www.thehindu.com/2008/12/05/stories/2008120550970200.htm

Andhra Pradesh - Visakhapatnam

Investors to challenge IT SEZ notification

Santosh Patnaik

Take exception to declaring constructions illegal

The entire process is illegal as land has been bought much before the notification, it is said
Propriety of APIIC directive to entrepreneurs to surrender sale deed questioned

VISAKHAPATNAM: A legal battle is likely with the promoters of software units deciding to challenge legally the notification on IT SEZ at Rushikonda.

“The entire process is illegal as the entrepreneurs have bought land from the AP Industrial Infrastructure Corporation two and half years ago and got it registered. The notification came much later by the Ministry of Commerce on the basis of false information by the APIIC that it was the owner and in possession of the land at Rushikonda,” an investor bemoaned.

Contentious issue

After the notification, the APIIC asked the entrepreneurs to surrender the sale deed of the property bought by them at the rate of Rs.10 lakhs an acre and get it changed to lease. Members of the Rushikonda IT Park Association question as to why they should surrender the ownership right after developing the area by spending huge amounts on their own.

The association, which took strong exception to the declaration of the constructions put by them as illegal by the Visakhapatnam Special Economic Zone and the order by the APIIC to the EPDCL to suspend power supply, decided to approach the court in a few days, sources told The Hindu.

Based on the petition submitted by the entrepreneurs, the Ministry of Commerce sought a factual report on SEZ status and the VSEZ authorities subsequently submitted a report. Rushikonda will become the country’s first IT SEZ to be denotified if the plea of the entrepreneurs is considered by the Ministry.

Infrastructure

As per Section 5A of SEZ rules, the developer (in this case APIIC) should create the infrastructure and the facilities for plug and play. “In our case, we have paid Rs.5 crores to the VUDA to create the facilities after appointing it as the developer,” association vice-president Naresh Kumar said.

The entrepreneurs feel that the IT SEZ is only a paper entity as the promoters would not be entitled to duty benefits under SEZ rules as they had taken up constructions long ago.

Tax benefits available for new units will not be extended to them as they are already in operation of software exports. Existing units are not treated as new units and taxed from day one.