Submitted by Aadesh Agarkar
Part XIII, of the Constitution under article 301 to 307 lays down the provisions relating to trade, commerce and intercourse. Objectives to remove the impediment in the way of Interstate and Intra- state commerce and trade, thus to make the country one single economic unit. This is to break down the barrier of commerce which existed within India prior to the Constitution.
Freedom of trade commerce and intercourse
Article 301 declares that trade, commerce and intercourse throughout the territory of India shall be free. Article 301 includes inter- state and intra- state trade thus restricting the legislative power of both the parliament and the state legislature.
Trade- Trade means buying and selling of goods.
Commerce- commerce means all forms of transportation via land, air and water.
Intercourse- Intercourse means movement of goods from one place to another.
The word free in article 301 does not imply freedom from laws and regulations. Purely regulatory and compensatory laws cannot be regarded as violative of freedom of trade and commerce. Such laws are intended merely to regulate Trade and Commerce they tend to facilitate not restrict and restrain freedom of trade. Article 19 (1)(g) also guarantees to Citizen the right to practice any profession and carry on any trade, business etc. But while article 19(1)(g) conferred upon the fundamental right of a citizen to carry on trade, business etc. Article 301 confers the only statutory right. Protection under article 19(1)(g) is available to citizens only whereas article 301 is available to anyone.
In Atiabari Tea Co. v. the State of Assam.
The validity of Assam Taxation Acts 1954 was challenged on the ground that it violated Article 301 of the Constitution. The supreme court held that as the movement of goods was directly taxed it was in violation of article 301 and held it to be void.
In State of Mysore v. Sanjeeviah
The government made a rule under the Mysore Forest Act 1900, banning movement of forest produce between sunset and sunrise. The Supreme Court held that the rule is void as it was not a regulatory but restrictive measure which infringed the right guaranteed under article 301.
In Automobile Transport Limited v. State of Rajasthan
The appellant challenged the validity of Rajasthan Motor Vehicle Taxation Act 1951 inter alia as violating article 301. The state government imposed taxes on all motor vehicles used and kept within the state of Rajasthan. The court held the tax valid as they were only regulatory measures imposing compensatory taxes- facilitating trade, commerce and intercourse. The test laid down in Atiabari case was approved by the court with a clarification that regulatory measures imposing compensatory tax do not come within the purview of restrictions contemplated in article 301. And therefore, such measure need not comply with the requirement of provisions of article 304(b).
Restrictions on freedom of trade commerce and intercourse
This article authorizes the Parliament to impose such restrictions on the freedom of trade commerce and intercourse between one state and another or any part of India in Public Interest.
Article 303 (a) clause(1)-
Provides that Parliament shall not have the power to make any law giving preference to any state over another by virtue of any entry relating to trade commerce and intercourse in any one list in the 7th schedule. Clause 2) the parliament can discriminate among States if the same is necessary due to the scarcity of goods in any part of India.
Article 304 (a)-
Empowers the state to impose any tax on goods imported from another state if similar goods in the state are subject to similar tax.
State of Madhya Pradesh vs Bhailal Bhai
A state of law imposed the sales tax on imported tobacco but locally produce tobacco was not subject to such sales tax. The court invalidated the tax as discriminatory.
provided that the state can impose reasonable restriction on freedom of trade commerce and intercourse as required in the interest of public provided that-
1) it has been previously sanctioned by the president.
2) the law is in the public interest and reasonable.
Article 305 saves the existing laws and laws providing for state monopolies in so far as the President may by order otherwise direct.
Appointment of authority-
Article 307 empowers the parliament to appoint such authority as it considers appropriate for the purpose of article 302, 303, 304, 305. It can confer on such authorities search powers and duties as it thinks necessary.
Submitted by Aadesh Agarkar