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State of Uttar Pradesh v. Reliance Industries Limited & 2026 INSC 491 - Taxation - Central Sales Tax

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Constitution of India - (i.) As per Article 269(1) of the Constitution of India, the Union Government has the competence to levy and collect tax on sale and purchase of goods in the course of inter-State trade or commerce. (ii.) Article 286(1) of the Constitution of India further clarifies the position that the State legislature cannot impose a tax on supply of goods or services where the supply takes place outside the State. (iii.) The Constitution (Sixth Amendment) Act, 1956 clarified the scope and competence of State Legislature to impose tax under Entry 54 of List II, Seventh Schedule, which cannot include any tax in the course of inter-State trade and commerce or international trade or commerce. (Para 76)

Central Sales Tax, 1956 - Section 3 of the CST Act integrates the constitutional intention to prohibit imposition of state sales tax in the course of inter-State trade. Read with its Explanation 1 and 2, it clearly mandates that wherever the moment of goods takes place from one state to another in the course of inter-State trade or commerce is in the exclusive domain of Union Government to tax under CST. The 2016 amendment, which added Explanation 3 to Section 3 of the CST Act, is a clarificatory provision inserted as abundant caution to formalise the preexisting situations. The aforesaid explanation did not create anything new except to explicitly state the preexisting legal position. To the extent that a transaction falls within the purview of the CST Act, Section 7 of the VAT Act can have no independent operation as the boundaries of the State's jurisdiction in such matters have already been drawn by the Constitution and the CST Act. (Para 76)

Constitution of India - In the field of taxation, the limitation prescribed and categorised under the Constitution are of three categories – (i) abstraction; (ii) eclipse and; (iii) division. (Para 33-37) - Article 265 - i. The levy and collection of the tax must be under the authority of law. ii. The tax to be levied must be within the competence of the legislature imposing the tax and the validity of the tax has to be adjudged with reference to the competence of the legislature at the time of the statute authorising the tax was enacted. iii. The law referred in the Article 265 refers to a statutory law or a law made by the legislature as against the executive order. (Para 46)

Constitution of India - Article 1 - Federalism - The Constitution of India postulates a political union as well as economic union which was brought about by integration of erstwhile British India with erstwhile Princely States. The Union and States are co-equals in their respective fields under the Indian federal structure. Framers of our Constitution created a unique federal structure which cannot be abridged in a sentence or two. The nature of Indian federalism can only be ascertained from a study of various provisions of the Constitution of India. A unique balance is maintained in the demarcation of the powers to preserve the federation. It is not helpful to call India as quasi-federal as the features are unique and quite different from other countries like USA, UK, etc. (Para 26-28)

Interpretation of Statutes - Tax Statute - Interpretation of tax statute is to be done is a strict manner. The words have to be given their natural meaning without expanding the ambit or reducing the same. A man sought to be taxed comes within the letter of law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the authorities seeking to recover the tax, cannot bring the subject within the letter of law, the subject is free, however apparently within the spirit of law the case might otherwise appear to be. In the garb of interpretation, the judiciary cannot amend the provisions of the Constitution of India, which has been carefully drafted by the Union Parliament. This Court can only provide meaning and expound the avowed purpose of the law. (Para 58-59)

Public Trust Doctrine - This is a doctrine rooted in environmental jurisprudence, grounded in Articles 21, 48A and 51A(g) of the Constitution of India, and directed towards the protection and preservation of natural resources for the benefit of present and future generations. The doctrine does not specifically proscribe the alienation of property held in trust for the public; its operation is concerned with normative standards of resource management and governance, not with the determination of taxable situs or the adjudication of fiscal claims. The doctrine, in its avowed purpose, imposes affirmative duties upon the State as trustee; it does not and cannot serve as an instrument to override the constitutional scheme of legislative competence or to create taxing jurisdiction where the Constitution has not conferred any. The doctrine cannot be utilised to enable multiple taxation by State upon a single inter-State transaction, when the constitutional scheme has expressly and exclusively reserved that field to the Union. The Courts must necessarily limit this doctrine to its avowed purpose; to expand it beyond that purpose would be to distort a valuable instrument of environmental governance into a tool for overriding constitutional guarantees, an expansion that this Court is not prepared to countenance. (Para 88)

State of Uttar Pradesh v. Reliance Industries Limited & 2026 INSC 491 - Taxation - Central Sales Tax
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Case Info

Extracted Case Information


Case name: State of Uttar Pradesh & Ors. v. Reliance Industries Limited & Ors. (with connected appeals: State of U.P. v. Tata Chemicals Ltd. & Ors.; State of U.P. v. Kribhco Shyam Fertilizers Ltd. & Ors.; State of U.P. v. Indian Farmers Fertilizers Cooperative Ltd. & Ors.)


Neutral citation: 2026 INSC 491


Coram: J.K. Maheshwari, J. and Atul S. Chandurkar, J.


Judgment date: 15 May 2026


Caselaws and Citations Referred

  1. Reliance Natural Resources Ltd. v. Reliance Industries Ltd., (2010) 7 SCC 1
  2. Reliance Industries Ltd. v. Union of India, (2014) 11 SCC 576
  3. Bengal Immunity Co. Ltd. v. State of Bihar, (1955) 1 SCC 763
  4. State of Bombay v. United Motors (India) Ltd., (1953) 1 SCC 514 : 1953 SCR 1069
  5. State of Travancore-Cochin v. Shanmugha Vilas Cashewnut Factory, (1953) 1 SCC 826 : 1954 SCR 53
  6. Hoechst Pharmaceuticals Ltd. v. State of Bihar, (1983) 4 SCC 45
  7. Synthetics and Chemicals Ltd. v. State of U.P., (1990) 1 SCC 109
  8. Jindal Stainless Limited and Another v. State of Haryana and Others, (2017) 12 SCC 1
  9. Union of India v. Deoki Nandan Aggarwal, 1992 Supp (1) SCC 323
  10. Commissioner of Customs (Import), Mumbai v. Dilip Kumar, (2018) 9 SCC 1
  11. Pioneer Urban Land and Infrastructure Limited v. Union of India, (2019) 8 SCC 416
  12. Sedco Forex International Drill. Inc. v. CIT, (2005) 12 SCC 717
  13. State of Bihar v. Ramesh Prasad Verma, (2017) 5 SCC 665
  14. Shyam Sunder v. Ram Kumar, (2001) 8 SCC 24
  15. Brij Mohan Das Laxman Das v. CIT, (1997) 1 SCC 352
  16. CIT v. Podar Cement (P) Ltd., (1997) 5 SCC 482
  17. State of Kerala v. Attesee, 1989 Supp (1) SCC 733
  18. State of Andhra Pradesh v. NTPC, (2002) 5 SCC 203
  19. Hyderabad Engineering Industries v. State of A.P., (2011) 4 SCC 705
  20. Burmah Shell Oil Storage & Distributing Co. of India Ltd. v. Belgaum, AIR 1963 SC 906 : 1963 Supp (2) SCR 216
  21. Calcutta Gas Co. Ltd. v. State of W.B., AIR 1962 SC 1044 : 1962 Supp (3) SCR 1
  22. Tata Iron and Steel Co. Ltd. v. S.R. Sarkar, AIR 1961 SC 65 : (1961) 1 SCR 379
  23. 20th Century Finance Corpn. Ltd. v. State of Maharashtra, (2000) 6 SCC 12
  24. English Electric Co. of India Ltd. v. CTO, (1976) 4 SCC 460 : 1977 SCC (Tax) 23 : (1977) 1 SCR 631
  25. Union of India v. K.G. Khosla and Co. Ltd., (1979) 2 SCC 242 : 1979 SCC (Tax) 101
  26. Sahney Steel and Press Works Ltd. v. CTO, (1985) 4 SCC 173 : 1985 SCC (Tax) 644
  27. Manganese Ore (India) Ltd. v. Regional Asstt. CST, (1976) 4 SCC 124 : 1976 SCC (Tax) 447
  28. C. Govindarajulu Naidu & Co. v. State of Madras, 1952 SCC OnLine Mad 229 : AIR 1953 Mad 116
  29. Goslino Mario v. CIT, (2000) 10 SCC 165 : (2000) 241 ITR 312
  30. Sonia Bhatia v. State of U.P., (1981) 2 SCC 585
  31. M.C. Mehta v. Kamal Nath, (1997) 1 SCC 388
  32. Intellectuals Forum, Tirupathi v. State of A.P., AIR 2006 SC 1350

US case noted: Peoples Natural Gas Co. v. Public Service Commission, 270 U.S. 550 (1926).


High Court decision distinguished: State of Gujarat v. Gas Authority of India Ltd., SCA No. 12980 of 2007 (Guj HC).


Statutes / Constitutional Provisions / Regulations Referred


Key constitutional provisions:Article 1; Articles 13, 21, 48A, 51A(g); Articles 245–253; Articles 264–281; Part XII & Part XIII; Articles 265, 268–269, 269(3), 286 (pre‑ and post‑Sixth Amendment), 301–307; Article 366(29‑A); Entries 54 List II, 92‑A & 97 List I, 33 List III, 53 List II (electricity).


Central statutes and rules:

  • Central Sales Tax Act, 1956 – especially sections 2(g), 3 (Explanations 1–3), 4, 5, 7, 8(4), 9, 14, 15.
  • Central Sales Tax (Registration and Turnover) Rules, 1957 – Rule 12 and Form‑C.
  • Income Tax Act, 1961 – section 9(1)(ii) (for analogy on explanations).
  • Additional Duties of Excise (Goods of Special Importance) Act, 1957 (context).
  • Oilfields (Regulation and Development) Act, 1948.
  • Petroleum and Natural Gas Rules, 1959.
  • Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976.
  • Petroleum and Natural Gas Regulatory Board Act, 2006.
  • PNGRB (Access Code for Common Carrier or Contract Carrier Natural Gas Pipelines) Regulations, 2008.
  • Government of India Office Memorandum dated 21.07.2015 clarifying section 3 CST (common carrier gas).

State legislation:

  • Uttar Pradesh Value Added Tax Act, 2008 – especially section 7.
  • Various pre‑GST State sales tax/electricity duty statutes are discussed contextually (e.g., M.P. Electricity Duty Act, M.P. Upkar Adhiniyam) through cited cases.

Contracts / policy instruments:

  • New Exploration and Licensing Policy (NELP), 1999.
  • Production Sharing Contract (PSC) for KG‑D6 block.
  • Gas Sales and Purchase Agreements (GSPA).
  • Gas Transportation Agreements (GTA).
  • Gas Utilization Policy (GUP).
  • 2006 “Guidelines” and 2008 “Regulations” under PNGRB on common carrier / open access.

Three‑Sentence Brief Summary


The Supreme Court held that Reliance’s supply of natural gas from the KG‑D6 offshore field to buyers in Uttar Pradesh is an inter‑State sale under section 3(a) of the CST Act, because the movement of gas from Andhra Pradesh to U.P. is occasioned by the GSPA and the sale is completed at the delivery point at Gadimoga where title and risk pass. It ruled that Explanation 3 to section 3 CST (on gas transported through a common carrier pipeline and becoming commingled and fungible) is clarificatory and therefore applies to the earlier period as well, so the use of common carrier pipelines and commingling in transit does not convert the transaction into an intra‑State sale in U.P. Consequently, the Court affirmed the Allahabad High Court, held that U.P. has no jurisdiction to levy VAT on these transactions in view of Articles 269 and 286 and sections 3 and 4 of the CST Act, and dismissed all the State’s appeals.