.jpeg){kind=small}
Legal Review and Analysis of Commissioner of Service Tax Mumbai vs M/s Bharat Petroleum Corporation Ltd & Anr 2026 INSC 723
Principal-Agent Relationship vs. Sale: Service Tax Liability on CNG Marketing Activities
Case Snapshot
Case Name: Commissioner of Service Tax Mumbai v. M/s Bharat Petroleum Corporation Ltd. & Anr.
Citation: 2026 INSC 723
Bench: Justice N.V. Anjaria and Justice Aravind Kumar
Date of Judgment: July 20, 2026
Area of Law: Service Tax, Finance Act, Business Auxiliary Service, Agency Law
Judgment in Brief
The Supreme Court allowed the Revenue's appeals and held that the activities of BPCL and HPCL in relation to the sale of Compressed Natural Gas (CNG) through their outlets on behalf of Mahanagar Gas Ltd. (MGL) constituted "Business Auxiliary Service" under Section 65(19) read with Section 65(105)(zzb) of the Finance Act, 1994, and were therefore liable to service tax. The Court distinguished between a "sale" (principal-to-principal transaction) and an "agency" (principal-to-agent relationship). Examining the agreements between the parties, the Court found that MGL retained control over the goods, fixed the retail price, bore the risk, and paid commission to the respondent-Corporations. The title in the goods never passed to BPCL/HPCL, and they acted merely as facilitators/agents. The order of CESTAT reversing the service tax demand was set aside.
Relevant Facts
MGL was engaged in manufacturing and distributing CNG. It supplied CNG through retail outlets owned by BPCL and HPCL (respondent-Corporations).
Agreements were executed between MGL and the respondent-Corporations for the sale of CNG through their outlets.
The Department issued show-cause notices to BPCL and HPCL, alleging that they were providing "Business Auxiliary Service" to MGL and were liable to pay service tax on the commission/profit margin received.
The Adjudicating Authority confirmed the demand. CESTAT set aside the demand, holding that the transactions were on a "Principal-to-Principal" basis and constituted sale.
Aggrieved, the Revenue appealed to the Supreme Court.
Issues Before the Court
... Upgrade to a Premium Plan to view the full judgment.