Freedom of Trade, Commerce and Intercourse Article 301 – 307

The term Trade is an important part of India because no country can produce all products according to its needs. The word ‘trade’ can be defined as the action of ‘buying’ and ‘selling’ goods and services, while the term ‘commerce’ includes all forms of transportation such as land, air, or water and the term ‘intercourse’ includes movement of goods from one place to another place. The Constitution of India describes the provision regarding the freedom of trade, commerce, and intercourse in part xviii Article 301 to 307. These provisions were adopted from the Constitution of Australia. Article 301 of the Indian Constitution declares that trade, commerce, and intercourse throughout the territory of India shall be free whereas Section 302 to 305 lays down the restrictions on Article 301. This restriction is important because no freedom is ‘absolute’ and even in Australia the freedom is not ‘absolute’ but regulated and relative. Article 301 applies not only to inter-state trade but also intra-State trade.

Article 301 defines Freedom of trade, commerce, and intercourse –In these provisions, the trade, commerce, and intercourse throughout the territory of India shall be free. The word ‘free’ in this provision does not mean freedom from laws or regulations.

Inter Relationship between Article 301 and 19(1)(g)

Article 19(1)(g), a fundamental right confers to practice any profession or to carry on any occupation, trade, or business. The relationship between the provision of Article 301 and Article 19(1)(g) is uncertain. The difference between these two provisions are:-

• Article 19(1)(g) confers the right of the individual whereas Article 301 confers safeguards for carrying trade as a whole distinguished from an individual’s right to do the same.
• Article 19(1)(g) confers a fundamental right on citizens to carry on trade, business whereas Article 301 confers only a Statutory Right.
• Article 19(1)(g) can only be claimed by citizens whereas Article 301 can be claimed by anyone.
In the case of State of Bombay v. R.M.D. Chamarbaugwala the Supreme court held that all activities related to criminal nature or those activities which are undesirable or illegal like the lottery, gambling, clicking obscene pictures for money, hiring terrorists, trafficking of women and children all these activities would not be given any protection under Article 301.

Restrictions to Trade and Commerce

Powers of Parliament to impose restrictions on trade, commerce, and intercourse.

Article 302 confers the Restrictions that can be imposed by the Parliament by law on the freedom of trade, commerce, or intercourse between one state and another or within any part of the territory of India as may be required in the public interest. The power to decide public interest solely depends upon the Parliament as authorized by Article 302.

States power to regulate trade and commerce:

Article 304 (a) empowers the State to impose on goods imported from other States if similar goods in the State are subject to similar tax so as not to discriminate between goods so imported and goods manufactured in the State.

Restrictions imposed on trade, Commerce

Article 304(2) authorizes the State to impose such reasonable restrictions on the freedom of trade, commerce, and intercourse as may be required in the public interest. But no amendment or bill for this purpose can be introduced in the State legislature without the previous sanction of the President. Some conditions must be fulfilled when a law passed by a State to regulate interstate trade and commerce are

• Previous Approval or Sanction of the President must be obtained
• Must be in the interest of public
• Reasonable restrictions imposed by such a law.

Saving of Existing Laws:-

Article 305 saves existing laws and laws providing for State monopolies in so far as the President may by order otherwise direct. In Saghir Ahmad v. the State of U.P, the Supreme Court raised the question of whether an Act providing for State Monopoly in a particular trade or business conflicts with the freedom of trade and commerce, guaranteed by Article 301, but left questioned undecided.

Important Landmark Judgements

Atiabari Tea Company v. the State of Assam

Fact:-
In the case of Atiabari Tea Company v. the State of Assam, the validity of the Assam Taxation Act of 1954(levies a tax on goods transmitted through Inland Waterways and Road). The petitioner carried on the business of growing tea and exporting it to Calcutta (Kolkata) via Assam. While passing through Assam the tea was liable to tax under the said Act
Judgment:-
The Supreme Court held that taxes may and do several restrictions if they directly and immediately restrict trade. According to the Court, the freedom guaranteed by Article 301 would become illusory in the movement, transport, or the carrying of Goods was allowed to be impeded, obstructed, or hampered by taxation without satisfying the requirements of Article 302 to 304. The Court held that the impugned law undoubtedly levied a tax directly or immediately on the movements of goods and therefore came within the preview of Article 301. The Act was, therefore, held void and these taxes could only be validly levied if the requirements of Article 304(b) are satisfied, i.e., the previous sanction of the President enacts such a law.

Automobile Transport Ltd. Vs State of Rajasthan

Fact:-
The State of Rajasthan had levied a tax on motor vehicles (Rs 2000 on goods vehicle per year and Rs 60 on a Motor Car) used within the state in any public place or kept for use in the State. The appellant challenged the Validity of the Rajasthan Motor Vehicles Taxation Act, 1951, inter alia, as violating Article 301
Judgment:-
The Court held that the tax is valid as they were only regulatory measures or compensatory taxes for facilitating the smooth running of trade, commerce, and intercourse. According to the Court, taxes are the sole key for a state, to preserve the financial health of the stage at large. Thus, to this extent, the majority view in the Atiabari case was now overruled by the Automobile case by the Court.

The State of Mysore V. Sanjeeviah

Fact:-
Under this case the Government made a rule under the Mysore Forest Act 1900, banning the movement of forest produce between sunset and sunrise
Judgment:-
The Court held that this law is void as it was not a ‘regulatory’ but ‘restrictive’ measure which infringed the right guaranteed under Article 301.

Author: Divya Tripathi,
Shri Ramswaroop Memorial University LLB 3 Year ( 2 Semester)

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