TaxTMI 
TaxTMI 
2015 (11) TMI 307
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....p membership into a corporate entity prior to April 01, 1997 are entitled to the fee continuity benefit in terms of paragraph 4 of Schedule III ....". Since the SAT answered the question in favour of the stock brokers (the respondents herein), SEBI is in appeal. 3. The basic facts are common in all the matters inasmuch as the concerned broker was previously member of the Bombay Stock Exchange (for short, 'BSE') in his individual capacity or as a partnership firm. He opted to form a corporate entity under the provisions of the Companies Act 1956 prior to April 01, 1997 and carried on the brokers' business under the name and style of new corporate entity by getting its membership converted through approval of BSE leading to registration by the SEBI as a corporate entity. Undoubtedly, no stock broker or sub-broker can buy, sell or deal in securities unless it is granted Certificate of Registration by SEBI under the Regulations and for that, ordinarily the stock broker is required to pay the requisite fees in the manner provided in the Regulations. In particular, Regulation 10 provides that every applicant eligible for the grant of a certificate shall pay such fees and in such manne....
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....d that the conversion of individual or partnership membership card of the exchange into corporate entity shall be deemed to be in continuation of the old entity and no fee shall be collected again from the converted corporate entity for the period for which erstwhile entity has paid the fee as per the regulations. 4A. ...... ...... ...... 5. If a stock broker fails to remit fees in accordance with Paragraphs 1 and 2, he shall be liable to pay interest at 15% per annum for each month of delay or part thereof. Provided that the liability to pay interest as aforesaid may be in addition to any other action which the Board, may take as deemed fit against the stock broker under the Act, or the Regulations. Provided further ...... ...... ...... II. ...... ...... ...... III. Manner of Fees to be paid. The fees specified above shall be paid on or before the 1st day of October each year payable by draft in favour of "The Securities and Exchange Board of India" at Bombay, or at the respective regional office". 5. Case of the SEBI is that since Para 4 of Schedule III was introduced by an amending notification dated 21.1.98 which....
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....ablished rule of construction "that retrospective operation is not to be given to a statute so as to impair an existing right or obligation other than as regards the matter of procedure, unless that effect cannot be avoided without doing violence to the language of enactment." Similar view was expressed in the case of Mahadeolal. 8. Reliance was also placed upon a Constitution Bench judgment in the case of K.S. Paripoornan v. State of Kerala & Ors., (1994) 5 SCC 593. There the issue related to retrospectivity but in an entirely different context of whether there must be clear intendment in the law if an amendment dealing with substantive rights is to apply to pending legal proceedings, initiated prior to the commencement of the amending Act. The majority held that the intendment in such a situation must be in clear terms. In the case of C. Gupta v. Glaxo- Smithkline Pharmaceuticals Ltd., (2007) 7 SCC 171 the Court, in the context of benefits under the Workmen's Compensation Act, reiterated the well established law that an enactment in order to be read as retrospective, must have an express provision to that effect or same effect must flow by necessary implication or intendment. ....
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....licable to interpretation of legal provisions governing a fiscal levy are attracted in the present case and not the rules of interpretation governing other laws. According to him the plain language of paragraph 4 is decisive and that led to the decision under appeal against SEBI. According to him even if some amount of ambiguity is found in the relevant provision then the interpretation which is favourable to the brokers needs to be adopted. He further made a distinction between power to a levy duty or fee and the power of collection. According to him a competent authority, in this case SEBI, can decide for itself whether to proceed with collection or not. Embargo on collection, according to him, is clearly prospective in the present facts. 11. On behalf of respondents reliance was placed upon judgment in the case of Mathuram Agrawal v. State of Madhya Pradesh (1999) 8 SCC 667 wherein, in the context of municipal taxes, this Court held that the intention of the Legislature in a taxing statute is to be gathered from the express language particularly where it is plain and unambiguous. It is not permissible to add or substitute words for giving a meaning to such statutes for the pu....
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....rship card of the exchange into corporate entity shall be deemed to be in continuation of the old entity and no fee shall be collected again from the converted corporate entity for the period for which the erstwhile entity has paid the fee as per the regulations." 14. Reliance was placed upon judgments in the case of K.P. Varghese v. Income Tax Officer Ernakulam (1981) 4 SCC 173 and also in the case of Commissioner of Sales Tax, U.P. v. Indra Industries (2000) 9 SCC 66 in support of the submission that the Press Release may not be having statutory effect but it helps in understanding the intention of SEBI Board which issued the Release. In other words, the respondents sought to rely upon the principle of contemporanea expositio as propounded in the case of K.P. Varghese. In Indra Industries the circulars issued by the Income Tax Department were held to have binding effect upon the taxing authorities though it may not be binding on the courts or on the assessee. 15. For highlighting the general principles concerning retrospectivity of a statutory Act, Rule or notification, Mr. Divan relied upon a Constitution Bench judgment in the case of CIT v. Vatika Township (P) Ltd., (2015....
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.... to the eligible entities only in future and hence the provisions do not operate retrospectively. Further stand of the respondents is that SEBI itself cannot question the validity of the circulars and policy decisions declared by the SEBI Board and such circulars and declarations granting benefits even from a retrospective date cannot be held bad in law in view of law noticed and laid down in Vatika case. The matter could have been different if SEBI had attempted to impose liabilities or create obligations upon stock brokers from a retrospective date. In case of conferment of benefits, no vested rights are adversely affected and in such cases retrospective operation is protected and permissible on the principles noticed in Vatika case. 17. In reply Mr. C.U. Singh referred to policy circular dated 28.3.2002 which inter alia states that pursuant to a judgment of this Court dated 1.2.2001 directing SEBI to amend the Regulations in light of recommendations of the R.S. Bhatt Committee report, SEBI had examined representations from the brokers and issued clarifications contained in part A of the circular. Part A, inter alia, contains a clarification in respect of applicability of the ....