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OPG Securities Private Ltd. v. S.E.B.I. & Anr.

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 3548 of 2010)Decided 4 Dec 2015
Civil Appeal No. 3548 of 2010
Justice Vikramajit Sen · Justice Shiva Kirti Singh

Background

OPG Securities is a stock broker registered with SEBI, which paid its annual registration fee based on the previous year's turnover. From 1 October 2006, a new Schedule IIIA allowed brokers to switch to a monthly fee based on monthly turnover, and OPG switched. SEBI later demanded further fees for the same period and for 2007-08, based on the old annual method, and the Securities Appellate Tribunal upheld those demands.

Decision Breakdown

The Supreme Court allowed the appeal, set aside the Tribunal's order and quashed SEBI's demand. It held that once Schedule IIIA applied to the broker, the old Schedule III could no longer be used to calculate fees for later periods. The saving clause in Schedule IIIA protected only fees that had already accrued before the switch, and did not revive the old method. The Court also confirmed that annual turnover is only a measure for calculating the fee, not the thing being taxed. SEBI was directed to refund the amount paid under the demand with 10% interest within two months.

Lesson Learnt

When a regulator lawfully introduces a new fee method and a business switches to it, the regulator cannot go back and apply the old formula to later periods. Transition clauses should be read closely to see what actually survives, and a business that has overpaid because of a wrong demand can recover the money with interest.

Official source (sci.gov.in)View Judgment (PDF)

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