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AreTrade,CommerceandIntercourseFree?
LegalServicesIndiaAreTrade,CommerceandIntercourseFree?
AreTrade,CommerceandIntercourseFree?
Writtenby:RaghvendraSinghRaghuvanshiIIIYr,NLIU,Bhopal
Chatwithus(2PM9PMIST)

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Thisarticle/paperaddressestheintricaciesinvolvedinthequestionthatwhetherthefreedomoftrade,commerceandintercourse(Article301,Constitutionof
India)isanabsolutefreedomordoesithavinganyrestrictionsonit?Foranabsolutefreedomoftrade,commerceandintercoursemayleadtoeconomic
confusionandmisuseofthesame.ThereforethewideamplitudeofthefreedomgrantedbyArticle301islimitedbyrestrictionsimposedonitunderArticles
302305.
TheconstitutionmakersdesiredtopromotefreeflowoftradeandcommerceinIndiaastheyfullyrealizedthateconomicunityandintegrationofthecountry
providedthemainsustainingforceforthestabilityandprogressofthepoliticalandculturalunityofthefederalpolity,andthatthecountryshouldfunctionas
onesingleeconomicunitwithoutbarriersoninternaltrade.Inordertoensurethatthestatelegislaturessubjectedtolocalandregionalpullsdonotcreatetrade
barriersinfuture,Article301wasincorporatedintheconstitution.Accordingtothisprovision,"trade,commerceandintercoursethroughouttheterritoryofIndia
shallbefree".
TheconstitutionmakerswerefullyconsciousoftheneedformaintainingeconomicunityandprogressoffederalpolitywhiledraftingtherelevantArticlesof
partXIII.Article301isnotadeclarationofamereplatitudeortheexpressionofapioushopeofadeclaratorycharacter.Itembodiesandenshrinesaprinciple
ofparamountimportancethateconomicunitywillprovidethemainsustainingforceforstabilityandtheprogressofthepoliticalandculturalunityofthe
country.
Legislativehistory
Article301andSection297oftheGovt.ofIndiaAct,1935
ThecontentoffreedomprovidedforbyArticle301islargerthanthefreedomcontemplatedbysection297oftheGovernmentofIndiaAct,1935.thesupreme
courtpointedoutthattheobservationsofthescopeofSection297andArticle301didnotfallforconsiderationinanearlierandtheobservationsthereincould
notbetreatedtorestrictthescopeofArticle301.

ContentofArticle301
ThescopeandcontentofArticle301dependsontheinterpretationsofthreeexpressionsusedtherein,viz.,'trade,commerceandintercourse','free'and
'throughouttheterritoryofIndia'.
Trade,commerceandintercourse
TheframersoftheIndianconstitution,insteadofleavingtheideaof'intercourse'tobeimpliedbytheprocessofjudicialpronouncements,expressly
incorporatedthesameinArticle301.Thewordstradeandcommercehavebeenbroadlyinterpreted.Inmostofthecases,theaccenthasbeenonthe
movementaspect.Forexample,intheAtiabariTeaCo.v.StateofAssamcase,thecourtemphasized:"whateverelseit(Art.301)mayormaynotinclude,it
certainlyincludesmovementoftradewhichisoftheveryessenceofalltradeandisitsintegralpart,"and,further,that"primarilyitisthemovementpartofthe
trade"whichArticle301hasinitsmind,that"themovementorthetransportofthetrademustbefree,"andthat"itisthefreemovementorthetransportof
goodsfromonepartofthecountrytotheotherthatisintendedtobesaved."
Again,inStateofMadrasv.NatarajaMudaliar,thecourtstatedthat"allrestrictionswhichdirectlyandimmediatelyaffectthemovementoftradearedeclared
byArticle301tobeineffective."Neverthelesscasesarenotwantingwheremovementhasnotbeeninvolvedbutotheraspectsoftradeandcommercehave
beeninvolved.Theviewnowappearstobefairlysettledthatthesweepoftheconcept'trade,commerceandintercourse'isverywideandthatthewordtrade
alone,eveninitsnarrowsense,wouldincludeallactivitiesinrelationtobuyingandselling,ortheinterchangeorexchangeofcommoditiesandthatmovement
fromplacetoplaceistheverysoulofsuchtradingactivities.
InKoteswarv.K.R.B.&Co,arestrictiononforwardcontractswasheldtobeviolativeofArticle301.Thesupremecourtheldthatapowerconferredonthe
stategovernmenttomakeanorderprovidingforregulatingorprohibitinganyclassofcommercialorfinancialtransactionsrelatingtoanyessentialArticle,
clearlypermitsrestrictionsonfreedomoftradeandcommerceand,therefore,itsvalidityhastobeassessedwithreferencetoArticle304(b).
InDistrictCollector,Hyderabadv.Ibrahim,theSupremeCourthasinvalidatedunderArticle301anattemptbyastatetocreatebyanadministrativeordera
monopolytodealinsugarinfavourofcooperativesocieties.TheorderwasissuedwhiletheproclamationofemergencywasoperativeandsoArticle19(1)(g)
couldnotbeinvoked.ThecourtthereforetookrecoursetoArticle301.
InFatehchandHimmatlalv.StateofMaharashtra,theSupremeCourtconsideredthequestionthatwhethertheMaharashtradebtreliefact,1976,was
constitutionallyvalidvisvisArticle301.Thisdependedonthefurtherquestionthatwhethermoneylendingtopoorvillagerswhichwassoughttobeprohibited
bytheActcouldberegardedastrade,commerceandintercourse.Thecourtansweredinthenegativealthoughitrecognisedthatthemoneylendingamongst
thecommercialcommunityisintegraltotradeandthereforeistrade.
Certainactivitiesmaynotberegardedastrade,commerceandintercoursealthoughtheusualformsandinstrumentsareemployedtherein,asforexample,
gambling,andthusanActrestrictingbettingandgamblingisnotbadunderArticle301.Inthiscase,thesupremecourthadexpressedsomesentimentsof

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suggestingthatunlawfulactivitiesopposedtopublicmoralityandsafetywouldnotberegardedastradeandcommerce.Butthecourtthenresiledfromthis
broadpropositionsayingthatthewidepropositionthatadealingagainstmoralswouldnotbebusiness,involvesthepositionthatthemeaningoftheexpression
'tradeorbusiness'woulddependupon,andvarywith,thegeneralstandardsofmoralityacceptedataparticularpointoftimeinthecountry.
Afteranelaboratestudyofthescopeofthemeaningofthesewords,itcanbesaidthattheword"trade"cannotbeconfinedtothemovementofgoodsbut
extendstotransactionslinkedwithmerchandiseorflowofgoods,thepromotionofbuyingandselling,advances,borrowings,discountingbillsandmercantile
documents,bankingandotherforumsofsupplyoffunds.Moneylendingandtradefinancingalsoconstitutestrade.
Free
Theword'free'inArticle301cannotmeananabsolutefreedomorthateachandeveryrestrictionontradeandcommerceisinvalid.TheSupremeCourthas
heldinAtiabarithatfreedomoftradeandcommerceguaranteedbyArticle301isfreedomfromsuchrestrictionsasdirectlyandimmediatelyrestrictorimpede
thefreeflowormovementoftrade.ThereforeArticle301wouldnotbeattractedifalawcreatesanindirectorinconsequentialimpedimentontrade,commerce
andintercoursewhichmayberegardedasremote.Theword'free'inArticle301doesnotmeanfreedomfromregulation.Ashasbeenobservedbythesupreme
court:"thereisacleardistinctionbetweenlawsinterferingwithfreedomtocarryouttheactivitiesconstitutingtradeandlawsimposingonthoseengaged
thereinrulesofproperconductorotherrestraintsdirectedtothedueandorderlymannerofcarryingouttheactivities."Regulationofhours,equipment,weight,
sizeofload,lights,trafficlawsaresomeexamplesofregulatorylawswhicharenothitbyArticle301.
Regulationslikerulesoftrafficfacilitatefreedomoftradeandcommercewhereasrestrictionsimpedethatfreedom.InStateofMysorev.Sanjeeviah,Arule
banningmovementofforestproducewithinthestatebetween10p.mandsunrisewasheldtobevoidunderArt.301asitwasnot'regulatory'but'restrictive.
TaxlawsarenotexcludedfromthescopeofArt.301.AtaxwhichdirectlyandimmediatelyrestrictstradewouldfallwithinthepurviewofArt.301.Fromthe
trendofthecaselawitappearsthatthereisagreaterreadinessonthepartofthecourtstocharacterizeanimpedimentonmovementofcommerceas'direct'
andsoholditbadunderArt.301,thantheonenotonmovementwhichisusuallyheldtobeindirectorremoteandsovalid,e.g.,octroi,salestax,purchase
tax,etc.ButsalestaxdiscriminatingbetweengoodsofonestatefromthoseofanothermayaffectfreeflowoftradeandsooffendArt.301.Ataxleviedby
ParliamentoninterstatesalewouldhaveoffendedArt.301assuchatax,initsessence,encumbersmovementoftradeorcommercebecausebyitsvery
definitionaninterstatesaleisonewhichoccasionsmovementofgoodsfromonestatetoanother.Nevertheless,itwasheldvalidbecauseofArt.302.
ThroughouttheterritoryofIndia
TheviewisdefinitelyheldnowthatArticle301appliesnotonlytointerstatebutalsotointrastatetradeandcommerce,i.e.tradewithinthestate.Therefore,it
meansfreedomoftradecommerceandintercourseistherewithinthestateand/oroutsidethestateand/oranypartwithintheterritoryofIndia.
RegulatoryandCompensatoryTax
Tosmoothenthemovementofinterstatetradeandcommerce,thestatehastoprovidemanyfacilitiesbywayofroadsetc..Theconceptofregulatoryand
compensatorytaxationhasbeenevolvedwithaviewtoreconcilethefreedomoftradeandcommerceguaranteedbyArt.301withtheneedtotaxsuchtradeat
leasttotheextentofmakingitpayforthefacilitiesprovidedtoitbythestate,e.g.,aroadnetwork.Ifachargeisimposednotforthepurposeofobtaininga
propercontributiontothemaintenanceandupkeepoftheroad,butforthepurposeofadverselyaffectingtradeorcommerce,thenitwouldamountto,a
restrictiononthefreedomoftrade,commerceandintercourse.
TheconceptofregulatoryandcompensatorytaxationhasbeenappliedbytheIndiancourtstothestatetaxationunderentries56and57ofListII.
AtiabariTeaCo.v.StateofAssam,
Facts:AtaxleviedbytheStateofAssamonthecarriageofteabyroadorinlandwaterwayswasheldbadfor"thetransportormovementofgoodsistaxed
solelyonthebasisthatthegoodsarethuscarriedortransported,andthus"directlyaffectsthefreedomoftradeascontemplatedbyArt.301."
TheSupremeCourttooktheviewthatthefreedomguaranteedbyArt.301wouldbecomeillusoryifthemovement,transport,orthecarryingofgoodswere
allowedtobeimpeded,obstructedorhamperedbythetaxationwithoutsatisfyingtherequirementsofArt.302to304.Thecourtdidnottakeintoconsideration
thequantum.oftaxburdenwhichbynomeanswasexcessive.Simplybecausethetaxwasleviedon'movement'ofgoods,fromoneplacetoanother,itwas
heldtooffendArt.301.
TheviewpropoundedinAtiabariwasboundtohavegreatadverseeffectuponthefinancialautonomyofthestates.Itwouldhaverenderedtheirtaxingpower
underentries56and57,ListII.
Accordingly,themattercametobereconsideredbytheSupremeCourtinAutomobileTransportv.Rajasthan.
Facts:TheStateofRajasthanhadleviedataxonmotorvehicles(Rs.60onamotorcarandRs.2000onagoodsvehicleperyear)usedwithinthestateinany
publicplaceorkeptforuseinthestate.Thevalidityofthetaxwaschallenged.
TakingtheviewthatfreedomoftradeandcommerceunderArt.301shouldnotundulycripplestateautonomy,andthatitshouldbeconsistentwithanorderly
society,theSupremeCourtnowruledthatregulatorymeasuresandcompensatorytaxesfortheuseoftradingfacilitieswerenothitbyArt.301asthesedid
nothamper,.butratherfacilitated,trade,commerceandintercourse.
Issue:Aworkingtesttodecidewhetherataxiscompensatoryornotwouldbetoenquirewhetherthetradespeoplearehavingtheuseofcertainfacilitiesfor
thebetterconductoftheirbusinessandpayingnotpatentlymuchmorethanwhatisrequiredforprovidingthefacilities?Ataxdoesnotceasetobe
compensatorybecausethepreciseorspecificamountcollectedisnotactuallyusedinprovidingfacilities.
TheconceptofcompensatorytaxevolvedinthiscasewassomethingnewasinAtiabari,thecourthaddismissedtheargumentthatthemoneyrealized
throughthetaxwouldbeusedtoimproveroadsandwaterwaysrathercurtlybysayingthattherewereotherways,apartfromthetaxinquestion,torealizethe
money,andthatifthesaidobjectwasintendedtobeachievedbylevyingataxonthecarriageofgoods,thesamecouldbedoneonlybysatisfyingArt.
304(b).
Decision:ThecourtruledthatthetaxwasnothitbyArt.301,asitwasacompensatorytaxhavingbeenleviedforuseoftheroadsprovidedforandmaintained
bythestate.
Thus,tothisextent,themajorityviewinAtiabariwasnowoverruledbyAutomobile.
SincethentheconceptofregulatoryandcompensatorytaxeshasbecomeestablishedinIndiawithreferencetoentries56and57,ListII,andtheconcepthas
beenappliedinseveralcases,andprogressivelythecourtshaveliberalisedtheconceptsoastopermitstatetaxationatahigherlevel.
BolaniIronOresv.StateofOrissa

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Acompensatorytaxisleviedtoraiserevenuetomeettheexpenditureformakingroads,maintainingthemandforfacilitatingthemovementandregulationof
traffic.TheSupremeCourtheldthattaxationunderentry57,ListII,cannotexceedthecompensatorynaturewhichmusthavesomenexuswiththevehicles
usingtheroads.Theregulatoryandcompensatorynatureofthetaxisthattaxingpowershouldbeusedtoimposetaxesonmotorvehicleswhichusetheroads
inthestateorarekeptforusethereon.
G.K.Krishnanv.StateofTamilNadu
Facts:TheStateofTamilNaduincreasedthemotorvehiclestaxfromRs.30to100perseatperquarterandthiswaschallengedasbeingviolativeofArt.301.
Issue:whetheranondiscriminatorytaxleviedbyastateshouldberegardedasarestrictionontradeandcommercebecauseofthefeelingthatthiswould
curtailstateautonomytolevytaxesfallinginthestatelegislativesphere?
ButtheSupremeCourtupheldthetax.Thecourtstated,"Acompensatorytaxisnotarestrictionuponthemovementpartoftradeandcommerce."Thetax
shouldnotgobeyond"aproperrecompensetotheStatefortheactualusemadeofthephysicalfacilitiesprovidedintheshapeofaroad."Intheinstantcase,
thetaxcollectionsamountedtooverRs.16croreswhiletheexpenditurefortheyearamountedtoRs.19.51croresandthisamountdidnotincludethegrants
tolocalgovernmentsfortherepairandmaintenanceofroadswithintheirjurisdiction.Thetaxwasthusheldtobecompensatoryandhencevalid.
TheSupremeCourtfurtherliberalisedthestatetaxingpowerbyupholdingastatetaxonpassengersandgoodscarriedonnationalhighways.
Internationaltouristcorporationv.StateofHaryana
Facts:ThestateofHaryanaleviedataxontransportersplyingmotorvehiclesbetweenDelhiandJammu&Kashmir.Theyusenationalhighway,passthrough
Haryanawithoutpickinguporsettingdownanypassengerinthestate.Theresponsibilityforconstructingandmaintainingofnationalhighwaysrestsonthe
Centre.Itwasthereforearguedbythetransportersthatthetaxcouldhardlyberegardedascompensatory,butthecourtrejectedthecontention.
TheSupremeCourtsaidthatwhatisnecessarytoupholdsuchataxistheexistenceofaspecific,'identifiable'objectbehindthelevyanda'sufficientnexus'
betweenthe'subjectandtheobjectofthelevy.'Thecourtfurthersaidthatastateincursconsiderableexpenditureformaintenanceofroadsandproviding
facilitiesfortransportofgoodsandpassengers.Eveninconnectionwithnationalhighways,astateincursconsiderableexpenditurenotdirectlybyconstructing
ormaintainingthembutbyfacilitatingthetransportofgoodsandpassengersalongwiththeminvariouswayssuchaslighting,trafficcontrol,amenitiesfor
passengers,haltingplacesforbusesandtrucks.Thatpartofanationalhighwaywhichlieswithinmunicipallimitsistobedevelopedandmaintainedbythe
state.Thereisthussufficientnexusbetweenthetaxandthepassengersandgoodscarriedonthenationalhighwaystojustifytheimpositionofthesaidtax.
Decision:thetaxwasheldtobevalid.
MalwaBusServicev.StateofPunjab
Facts:Inthiscase,intheyear1981,theStateofPunjabsubstantiallyincreasedtherateoftaxoneverystagecarriageplyingforhireandtransportof
passengers.TheratesadoptedwereRs.500perseatperyearsubjecttoamaximumofRs.35,000perbusirrespectiveofthedistanceoverwhichitoperated
daily.Accordingtothebudgetfiguresfor198182,therevenuereceiptsofthegovernmentfrommotorvehiclestaxwasRs.50croresasagainstthe
expenditureofRs.34crores.Thetaxwaschallengedonthegroundthatitwasnotcompensatoryasthegovernmentwasusingitforaugmentingitsgeneral
revenues,butthecourtupheldthetaxascompensatory.
Intheinstantcase,thebudgetexpenditureontheroadsandbridgesdidnotincludetheexpenditureincurredbythestateonotherheadsconnectedwithroad
transport,suchas,thedirectorateoftransport,transportauthorities,provisionforbusstands,lighting,trafficpolice,grantstolocalauthorities.Takingallthis
expenditureintoaccount,itbecameclearthatasubstantialpartofthelevyonmotorvehicleswasbeingspentannuallyonprovidingfacilitiestomotorvehicles
operators.Thecourtalsopointedoutthatinlateryears,thegovernmentexpenditureonroadsandbridgeshadsubstantiallyincreased.Italsosaidthatthe
figuresofincomeandexpenditureforonlyoneyearmightpresentadistortedpicture.Inthiscase,cumulativefiguresofreceiptsandexpenditurefornineyears
(19731982)presentedadifferentpicture.Describingtheprincipleunderlyingsuchatax,thecourtsaid:"whatisessentialisthattheburdenshouldnot
disproportionatelyexceedthecostofthefacilitiesprovidedbythestate."
Decision:ThereforethetaximposedbythestateofPunjabwasheldtobevalid.
Directandimmediaterestrictions
TherestrictionswhichwillattractArticle301mustbethosewhichdirectlyandimmediatelyrestrictorimpedethefreeflowormovementoftrade.Onlythose
taxeswhichdirectlyandimmediatelyrestricttradewouldfallwithinthepurviewofArticle301.therationalandworkabletesttoapplywouldbe:doesthe
impugnedrestrictionsoperatedirectlyorimmediatelyontradeoritsmovement?whatisprohibitedisataxwhosedirecteffectistohinderthemovementof
trade.
Restrictiononfreedomoftrade,commerceandintercoursethroughouttheterritoryofIndiacannotbejustifiedunlesstheyfallwithinArticle304.
InterrelationbetweenArticles301and19(1)(g)
Article19(1)(g),afundamentalright,confersonthecitizenstherighttopracticeanyprofessionorcarryonanyoccupation,tradeorbusiness.Thequestionof
interrelationshipbetweenArticles19(1)(g)and301issomewhatuncertain.
OneviewisthatwhileArticle19(1)(g)dealswiththerightoftheindividuals,Article301providessafeguardsforthecarryingontradeasawholedistinguished
fromanindividualsrighttodothesame.Thisviewishardlytenable.Article301isbasedonsection92oftheAustralianconstitutionwhichhasbeenheldto
compromiserightsoftheindividualaswell,andthesameshouldbethepositioninIndia.Inactualpractice,theviewhasneverbeenenforcedandindividuals
havechallengedlegislationonthegroundofitseffectontheirrighttocarryontradeandcommerce.ThesupremecourthasdenouncedthetheorythatArticle
301guaranteesfreedom"inabstractandnotoftheindividuals."
AdifferencebetweenArts.19(1)(g)and301,ithasbeensaid,isthatArt.301couldbeinvokedonlywhenanindividual,ispreventedfromsendinghisgoods
acrossthestate,orfromonepointtoanotherinthesamestate,whileArt.19(1)(g)canbeinvokedwhenthecomplaintiswithregardtotherightofanindividual
tocarryonbusinessunrelatedto,orirrespectiveof,themovementofgoods,i.e.,whileArt.301contemplatestherightoftradeinmotion,Art.19(1)(g)secures
therightatrest.
Art.301coversmanyinterferenceswithtradeandcommercewhichmaynotordinarilycomewithinArt.19(1)(g),
Freedomoftradeandcommerceisawiderconceptthanthatofanindividual'sfreedomtotradeguaranteedbyArt.19(1)(g).

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AreTrade,CommerceandIntercourseFree?
Art.19(1)(g)canbetakenadvantageofbyacitizen,whileArt.301canbeinvokedbyacitizenaswellasanoncitizen.Also,whileArt.19(1)(g)isnotavailable
toacorporateperson,Art.301maybeinvokedbyacorporationandevenbyastateoncomplaintsofdiscriminationorpreferencewhichareoutlawedbyArt.
303,discussedbelow.
Inemergency,Art.19(1)(g)issuspendedandsocourtsmaytakerecoursetoArt.301toadjudgethevalidityofarestrictiononcommerce.
Incertainsituations,onlyoneofthetwomayberelevant,asforexamplewhenthereisnodirectburdenonatradebutitmaybearestrictionintermsofArt.
19(1)(g)readwithArt.19(6).Insomeothersituations,bothprovisionsmaybecomeapplicableanditmaybepossibletoinvokethemboth.
Art.301isamandatoryprovisionandalawcontraveningthesameisultravires,butitisnotafundamentalrightandhenceisnotenforceableunderArticle32.
ButiftherightunderArticle19(1)(g)isalsoinfringed,thenArticle32petitionmaylie.
Isthisfreedomanabsoluteone?
Aquestionarisesherethatwhetherthefreedomoftrade,commerceandintercourseisanabsolutefreedomordoesithavinganyrestrictionsonit?Foran
absolutefreedomoftrade,commerceandintercoursemayleadtoeconomicconfusionandmisuseofthesame.Thereforethewideamplitudeofthefreedom
grantedbyArticle301islimitedbyArticles302305.theexceptionstoArticle301are:
a.ParliamentisgivenpowertoregulatetradeandcommerceinpublicinterestunderArticle302subjecttoArticle303.
Article302empowersparliamenttoimposerestrictionsonthefreedomoftrade,commerceandintercoursebetweenonestateandanother,orwithinanypartof
theterritoryofIndia,inthepublicinterest.ThereferenceofArticle302torestrictiononthefreedomoftradewithinanypartoftheterritoryofIndiaasdistinct
fromfreedomoftradebetweenonestateandanotherclearlyindicatesthatthefreedomgrantedbyArticle301coversbothinterstateandintrastatetradeand
commerce,asArticle302isintheverynatureofanexceptiontoArticle301.
TheEssentialCommoditiesActhasbeenheldtoimposereasonablerestrictionsontherighttocarryontradeandcommerceasguaranteedbyArticles19(1)(g)
and301.
InPragIce&OilMillsv.India,thesupremecourtsaidthatArticle302doesnotspeakof'reasonablerestrictions'yetthecourtfurtherheldthat'itisevident
thatrestrictionscontemplatedbyitmustbearareasonablenexuswiththeneedtoservethepublicinterest.'
b.ThestatelegislaturesaregivenpowertoregulatetradeandcommerceunderArticle304subjecttoArticle303.
Article304,whichconsistsoftwoclauses,empowersthestatestomakelawstoregulateandrestrictthefreedomoftradeandcommercetosomeextent.
Accordingto304(a),astatelegislaturemaybylawimposeongoodsimportedfromotherstatesanytaxtowhichsimilargoodsmanufacturedorproduced
withinthatstatearesubject,so,however,asnottodiscriminatebetweengoodssoimportedandgoodssomanufacturedorproduced.
*Article304(a)thussaysthatstatelegislaturemayimposetaxesbutoneconditionisthere,itshallnotbediscriminatory.
InKalyaniStoresv.StateofOrrisa,ThestateofOrrisaleviedadutyonforeignliquor.Nosuchliquorwasproducedwithinthestateandthewholeofitwas
importedfromotherstates.Thesupremecourtruledthatifthegoodsofaparticulardescriptionwerenotproducedwithinastate,thepowertolegislateunder
Article304(a)wouldnotavailabletoit.Intheinstantcaseasnoliquorwasproducedwithinthestate,thestatecouldnotuseitslegislativepowerunderArticle
304(a).
BasicallytheconceptofequalityinArticle304(a)and14are,somehow,same.InVideoElectronicsPvtLtd.v.StateofPunjab,thesupremecourtheldthat
Article304(a)enjoinsthestatenottodiscriminatewithrespecttoimpositionoftaxonimportedgoodsandlocallymadegoods.
InShriMahavirOilMillsLtd.v.StateofJ&K,thesupremecourtfurthersaidthatthisclausebarsstatesfromcreatingtaxbarriers/fiscalbarriersand/or
insulatingthemselvesbycreatingtariffwalls.
*Article304(b)authorizesastatelegislaturetoimposebylawsuchreasonablerestrictionsonthefreedomoftrade,commerceandintercoursewithorwithin
thatstateasmayberequiredinpublicinterest,providedthatthebilloramendmentforthispurposehasreceivedtheprevioussanctionofthepresidentbefore
itisintroducedormovedinthestatelegislature.
ThereisalsoaprovisioninthisArticleandthatis"providednobilloramendmentforthepurposesofclause(b)shallbeintroducedormovedinthelegislature
ofastatewithouttheprevioussanctionofthepresident."
InStateofKarnatakav.HansaCorporation,theSupremeCourtsaidthat:
ThoughArticle304(b)requiresthepriorassentofthepresidentbeforethebillisintroducedinthelegislatureyet,duetoArticle255,ifpriorassentisnot
secured,theinfirmitycanbecuredbysubsequentassentofthepresidentafterthebillhasbeenpassedbythestatelegislature.
InAtiabaricase,astatelawimposingataxonmovementofgoodsininterstatecommercewasheldinvalidbecauseofthelackofpresidentialassent.
InSaghirAhmedv.StateofU.P,itwasheldthatsubsequentsanctionisofnoeffect.
ButinothercasesitwasheldthatprovisohastobereadinaharmoniousmannerwithArticle255,whichsaysthatiftheActreceivestheassentofthe
president,thenoncomplianceoftheprevioussanctiontotheintroductionofthebilliscured.
c.Article305protectsexistinglawsfromtheoperationofArticles301and303.italsosavesnationalizationlawsfromtheoperationofArticle301.
Restrictionsandregulations
Thecontrastbetween"freedomunderArticle301and"restrictions"underArticle302and304clearlyappears:"thatwhichinrealityfacilitatestradeand
commerceisnotarestrictionandthatwhichinrealityhampersorburdenstradeandcommerceisarestriction."itistherealityorthesubstancethathastobe
lookedintoanddetermined.IfArticle301isinterpretedtocoverallregulation,itwillmeanthatthestatelegislaturecannotcontroltrade,commerceand

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intercourseevenifitistofacilitatefreemovement.ItmustyetproceedtomakealawunderArticle304(b)andnosuchbillcanbeintroducedormovedinthe
legislatureofastatewithouttheprevioussanctionofthepresident.

Necessityofreasonablerestrictions
Nowaquestionarisesastothenecessityofsuchreasonablerestrictions.Toanswerthis,theconstitutionalframerswereconsciousoffreetrade,commerce
andintercoursethroughouttheterritoryofIndiaisnecessary.Atthesametime,suchfreedommayrequiretobecurtailedorcurbedinpublicinterestandthe
parliamentandthestatelegislatureshavebeengivenpowersunderArticles302,303,304.
TheobjectofpartXIIIisnottomakeinterstatetrade,commerceandintercourseabsolutelyfree.Reasonablerestrictionsinpublicinterestarepermissible.
Regulatoryorcompensatorymeasurescannotberegardedasviolativeofthefreedomunlesstheyareshowntobecolorablemeasurestorestrictthefreeflow
oftrade,commerceandintercourse.ThereforeArticle304allowsimpositionofsuchreasonablerestrictionsonthefreedomoftradeasareinpublicinterest.
Conclusion
Toconcludethisresearchpaper,IwouldliketosaythatpartXIIIisthemostbadlydraftedpartoftheconstitutionofIndia.Theconstitutionframershadjust
borrowedthispartfromtheAustralianconstitution,(section92)perhaps,withouttakingintoconsiderationitsfurtherimplicationsandconsequencesina
countrylikeIndia.
Firstly,thefreedomenshrinedunderthepartXIII,issubjectexceptionuponexceptionandtherebylimitingthescopeofthesaidfreedom.
Secondly,theconstitutionframerscouldnothaveprovidedthewordslike"subjecttotheotherprovisionstothispart".Ifthispartisinterpretedliterallyorthe
literalruleofcommonlawisappliedthenitcanbesaidthatthispartistobereadonlywiththeotherprovisionsofthispartonlyandnottheotherprovisionsof
theconstitution.butpracticallyitisnotso,assupremecourt,inmanycases,asreferredinthispaper,hastakenthehelporreadalongwithotherprovisionsof
theconstitutionaswell.
Thirdly,thesebadlydraftedprovisionscanonlybecuredbytheamendmenttotheconstitution.Therefore,itneedsamendment.
Fourthly,itisnotaselfcontainedcode.MaybetheconstitutionhasspecificallyprovidedthatitwillsubjectonlytothepartXIII,butithastobereadina
harmoniousway.Therefore,itistobereadwiththeotherprovisionsoftheconstitution.
Theauthorcanbereachedat:raghav_nliu@legalserviceindia.com/PrintThisArticle
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10Dec11,20129:31pm

ArunaChoudhuryWorksatIampracticinglawyer
Companylawsarticlesareworthgoingthroughhere.
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4Dec14,201211:46am

RomaSenColumbiaUniversity
howtostartupafashiondesigncompanyinIndia
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3Dec14,201211:49am

DashansSuryawanshiWorksatIIIM(CSIR)JAMMU
RomaSen
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SaifQuraishiNoida,India
RomaSenhi,ucanwritetousatATTORNEYITL@GMAIL.COMforanycompanycorporationintheIndia.
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