Infosys violated SEZ rules at Chandigarh tech park, says revenue department report

The finance ministry has alleged that IT firm Infosys has committed “serious irregularities” at a Special Economic Zone in Chandigarh and also availed undue tax concessions and exemptions.

The revenue department has prepared a detailed report highlighting the alleged irregularities committed by Infosys in its Rajiv Gandhi Chandigarh Technology Park (RGCTP) SEZ in Chandigarh.

The report said that the land in the RGCTP, which should have been in possession of the Chandigarh administration (the developer) was in actual possession with Infosys in 2006, which is against SEZ rules.

An attempt was belatedly made in April 2009 by signing a lease deed, which is improper, the department has said.

Further, the land which should have been vacant had structures erected on it, and economic and commercial activities were being carried out, which was against the rules, the report said.

Officials from the finance and commerce ministries are likely to meet next week to finalise an action plan based on the revenue department’s report and seek approval from the Union Cabinet.

“As such, if need be, the issue can be discussed in detail during the next meeting between the two departments (revenue and commerce) to find a just and reasonable solution to this long pending issue,” revenue secretary Shaktikanta Das has wrote to commerce secretary Rajeev Kher on September 29.

The Indian Express emailed Kher a detailed questionnaire on October 10 on how the commerce ministry plans to resolve the issue. That remained unanswered at the time of this report going to press.

Infosys had also availed tax concessions for using duty free material for operation and maintenance of facilities in non-processing areas, while they were allowed to do so only in processing areas, the report said.

The existing SEZ rules mandates that the developer provide all infrastructural facilities for the SEZ and is allowed utilisation of duty-free raw materials for this purpose.

In the case of RGCTP all such works have been executed by Infosys and not by the developer. By doing so, the company has “incorrectly availed tax concessions which otherwise was available to a developer”, the revenue department said in the report.

In a reply to an e-mailed questionnaire, a spokesperson for Infosys denied any wrongdoing by the firm in the RGCTP. She said, “No land has been sold to Infosys by the Chandigarh Administration on free hold basis. Infosys signed the land lease agreement as per the provisions of SEZ Rules on April.

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