Fee regime transition for stock-brokers: earlier levy cannot continue for future periods once the new schedule applies.

Under the SEBI stock-broker fee regime, annual turnover is only the measure of levy, not the subject of levy. Once Schedule IIIA became applicable, Schedule III ceased to operate for future periods, and only liability already accrued under Schedule III before that date could survive under the saving clause. Future registration fee had to be computed under Schedule IIIA alone, not by continuing to apply Schedule III on the basis of turnover. Demands raised under Schedule III for periods after Schedule IIIA applied were therefore unsustainable, and the earlier liability was limited to amounts already accrued before the new schedule took effect.

---

---

Issues: Whether, after Schedule IIIA of the Securities and Exchange Board of India (Stock-brokers and Sub-brokers) Regulations, 1992 became applicable to a stock-broker, registration fee for future periods could still be demanded under Schedule III on the basis of annual turnover, and whether only accrued liability under Schedule III prior to that date remained recoverable.

Analysis: The fee regime under Regulation 10 of the Securities and Exchange Board of India (Stock-brokers and Sub-brokers) Regulations, 1992 treats annual turnover only as a measure of levy, not as the subject of levy. Schedule IIIA introduced a monthly fee structure and Schedule III itself was made inapplicable to stock-brokers governed by Schedule IIIA from the time it became applicable. The saving clause in Schedule IIIA preserved only those liabilities under Schedule III that had already accrued before Schedule IIIA applied; it did not authorise continued levy under Schedule III for subsequent periods. Accordingly, once the stock-broker opted into Schedule IIIA from 1.10.2006, future fee could be computed only under Schedule IIIA and not under Schedule III.

Conclusion: The demands raised on the basis of Schedule III for periods after Schedule IIIA became applicable were unlawful and could not be sustained.

Final Conclusion: The appeal succeeded, the impugned demand was quashed, and refund with interest was directed.

Ratio Decidendi: Where a later fee schedule becomes applicable to a regulated intermediary, the earlier schedule cannot be invoked for future periods unless a saving clause expressly preserves only liability already accrued before the new schedule took effect.

---