Gujarat HC Upholds SEZ Investor Stamp Duty Relief Despite Pre-Ordinance Leases

In a significant win for investors, the Gujarat High Court has decisively ruled that companies setting up units in Special Economic Zone (SEZ) cannot be denied promised stamp duty and registration fee exemptions just because their lease agreements were signed before a specific law, the Gujarat Special Economic Zone Ordinance, 2004, officially came into effect. This ruling means that if a government policy had already promised tax breaks to attract investment, those benefits must be honored, even if the formal legislation followed later. The court's decision stems from a case involving Sahajanand Technologies Pvt. Ltd., which had invested in an SEZ based on the Gujarat Government 2002 SEZ Policy that offered these crucial fiscal incentives. The state government had appealed a lower court's order to refund the company's stamp duty, arguing that the 2004 Ordinance should be the strict cut-off for eligibility. However, the High Court emphasized that the Ordinance merely formalized an existing policy, and denying benefits would create unfair discrimination and violate the principle of 'promissory estoppel,' where a government's promise leads to action by others. This landmark judgment, delivered by a Division Bench, reinforces the importance of policy consistency and government commitments for fostering a stable investment climate. The court has directed the Gujarat authorities to process and refund the disputed stamp duty and registration fee within six weeks. Industry watchers will be closely monitoring how this ruling influences similar cases and broader SEZ policy reforms currently being discussed, especially as India aims to boost manufacturing and attract more investment into these special zones.