Supreme Court of India dismissed a batch of petitions filed by the Uttar Pradesh government regarding Value Added Tax on natural gas transported from Andhra Pradesh through common carrier pipelines

¨     The Supreme Court of India on 14 May 2026 dismissed a batch of petitions filed by the Uttar Pradesh government regarding Value Added Tax (VAT) on natural gas transported from Andhra Pradesh through common carrier pipelines.

¨     The Bench comprised Justice J. K. Maheshwari and Justice Atul S. Chandurkar.

¨     The Court ruled that the transactions were inter-state sales.

¨     It held that the transactions fall under the Central Sales Tax Act, 1956.

¨     Section 3(a) of the Central Sales Tax Act, 1956 applies to sales that result in the movement of goods from one state to another.

¨     The Court held that the sale of natural gas from the KG-D6 Basin to buyers in other states qualified as an inter-state sale.

¨     The KG-D6 Basin is located off the coast of Andhra Pradesh.

¨     The Court stated that such sales are not subject to state VAT.

¨     Common carrier pipelines are transport systems used to move gas for multiple users under regulated access.

¨     The Court observed that gas transported through such pipelines from Andhra Pradesh to another state remains inter-state transport for taxation purposes.

¨     The judgment treated metering, distribution, and transfer of ownership in Andhra Pradesh as the point of sale.

¨     The Supreme Court upheld the 2012 judgment of the Allahabad High Court.

¨     The High Court had quashed assessment orders issued by the Uttar Pradesh government.

¨     The orders were passed against Reliance Industries Limited, Tata Chemicals, and Indian Farmers Fertiliser Cooperative Limited (IFFCO).

¨  The Supreme Court held that the later transportation of gas was only an incident of distribution and not a separate taxable event.