Legal Analysis: State of Uttar Pradesh & Ors v. Reliance Industries Limited & Ors

Citation: 2026 INSC 491
Court: Supreme Court of India
Bench: A Division Bench comprising Justice J.K. Maheshwari and Justice Atul S. Chandurkar
Date of Decision: May 15, 2026
Nature of Case: Civil Appeal No. 3910 of 2016 and connected appeals (arising from the judgment of the Allahabad High Court, Lucknow Bench, dated 07.09.2012)

Synopsis of the Judgment

The Supreme Court dismissed appeals filed by the State of Uttar Pradesh challenging the High Court’s order quashing VAT assessment on sale of natural gas by Reliance Industries Limited (RIL) to buyers in Uttar Pradesh. The core issue was whether the sale of gas extracted from KG‑D6 basin (offshore Andhra Pradesh) and delivered at Gadimoga, Andhra Pradesh, before being transported through common carrier pipelines to Uttar Pradesh, constituted an inter‑State sale under Section 3 of the Central Sales Tax Act, 1956 (CST Act) or an intra‑State sale liable to VAT under the Uttar Pradesh Value Added Tax Act, 2008. The Supreme Court held that the transaction was an inter‑State sale under Section 3(a) of the CST Act as the movement of goods from Andhra Pradesh to Uttar Pradesh was occasioned by the contract of sale. The Court clarified that Explanation 3 added to Section 3 in 2016 is clarificatory and retrospective, and that co‑mingling of gas in a common carrier pipeline does not alter the inter‑State character of the sale.

1. Basic Information of the Judgment

• Case Title: State of Uttar Pradesh & Ors v. Reliance Industries Limited & Ors (along with connected appeals: State of U.P. v. Tata Chemicals Ltd., State of U.P. v. KRIBHCO Shyam Fertilizers Ltd., State of U.P. v. Indian Farmers Fertilizers Cooperative Ltd.)

• Citation: 2026 INSC 491

• Civil Appeal Nos.: 3910 of 2016, 3913 of 2016, 3914 of 2016, 3915 of 2016

• Bench: Division Bench (Justice J.K. Maheshwari and Justice Atul S. Chandurkar)

• Date of Decision: May 15, 2026

• Court: Supreme Court of India (Civil Appellate Jurisdiction)

• Impugned Order: Judgment dated 07.09.2012 of the Allahabad High Court (Lucknow Bench) in Writ Petition No. 6281 of 2010 and connected cases

2. Legal Framework

Major Laws and Provisions Involved

• Constitution of India, 1950 – Articles 265 (tax to be by authority of law), 269 (taxes levied and collected by Union but assigned to States), 286 (restrictions on State taxation of sales), 301 (freedom of trade), and the Seventh Schedule – Entry 54 of List II (State tax on sale of goods), Entry 92‑A of List I (Central tax on inter‑State sales). The Sixth Constitutional Amendment (1956) was extensively discussed.

• Central Sales Tax Act, 1956 – Section 3 (when is a sale or purchase said to take place in the course of inter‑State trade or commerce), Section 4 (when is a sale or purchase said to take place outside a State), Section 8(4) and Rule 12 of CST Rules (Form‑C declarat

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