The court's order came on an appeal by the state government challenging the high court's interim order staying imposition of the tax on the sale of gas by RIL.

The UP government had challenged a July 26, 2011 order of the high court which granted stay on levy of Rs 724 crore as VAT for sale of the gas during 2009-2010.

The Supreme Court had on August 23, 2011 issued notice and sought responses of the Centre.

According to the state, RIL, which is engaged in extracting and refining petroleum and petrochemical products, was supplying natural gas to various fertiliser companies in Uttar Pradesh and, hence ,the state was entitled to levy VAT on the company.

RIL had taken the plea in the high court that the transaction in question is central sale made by it from the state of Andhra Pradesh and it is not liable to pay local tax (VAT) to the state government.

Source: Times of India, India,  dated 23/01/2012