Freedom of Trade, Commerce and Intercourse
Freedom of Trade, Commerce and Intercourse
Freedom of Trade, Commerce and Intercourse
Introduction:
The framers of the Indian Constitution were fully conscious of the importance of maintaining
the economic unity of the Union of India. Free movement and exchange of goods throughout
the territory of India was essential for the economic unity of the country which alone could
sustain the progress of the country. Free flow of trade, commerce and intercourse within and
across inter-State borders is an important pre-requisite for ensuring economic unity, stability
Most federal constitutions contain special provisions to protect this freedom. The Indian
Limitations for the common good are inherent in such freedom. That is why, legitimate
Economic unity is one of the constitutional aspirations and safeguarding its attainment and
Article 301.
Article 301: Subject to the other provisions of this Part, trade, commerce and intercourse
The main provision framed is Art. 301. According to this article “trade, commerce and
intercourse throughout the territory of India shall be free.” This constitutional provision
imposes a general limitation on the exercise of legislative power, whether of the Centre or of
the States, to secure unhampered free flow of trade, commerce & intercourse form one part
of the territory to another. The purpose underlying Art. 301 is to promote economic unity of
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India and that there should not be any regional or territorial economic barriers.
1. Article 301 imposes a limitation upon the exercise of legislative power, whether by the
Union or by a State.
2. The object of the freedom declared by this Article is to ensure that the economic unity of
3. Article 301 states that subject to the other provisions of Part XIII, trade, commerce and
intercourse throughout India shall be free. It is not freedom from all laws but freedom from
such laws which restrict or affect activities of trade and commerce amongst the States.
Constitution. The origins of Art 301 may be traced directly to sec. 92 of the Australian
Constitution, but there are some significant differences between the two provisions like
Coverage under Art. 301 is broader than that of Sec. 92 of the Australian Constitution. The
freedom in India is wider than that in Australia under Section 92. While Section 92 refers to
inter- State trade only, Article 301 includes both inter-State and intra-State Trade Activities.
The restrictions in Australia were spelled out by the Court whereas in India the Constitution
itself lays down restrictions on Article 301 which are contained in Articles 302 to 305.
correspondingly creates general limitation on all legislative power to ensure that trade,
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In Jindal Stainless Ltd. v. State of Haryana3, Article 301, refers to freedom from laws
which go beyond regulations which burden, restrict or prevent the trade movement between
Trade in liquor.
The permissive privilege to deal in liquor is not a “right” at all. The levy charged for parting
that privilege is neither a tax nor a fee. It is simply a levy for the act of granting permission
or for the exercise of power to part with the privilege. Therefore, Arts. 301-304 will be
rendered inapplicable at this activity in question. Further, there is not a single judgment
which upholds the applicability of Arts. 301-304 to the liquor trade. On the contrary
numerous judgments expressly hold these articles to be inapplicable to trade, commerce and
intercourse in liquor.
The freedom guaranteed by Art. 301 is not available to liquor because it is a noxious
substance injurious to public health, order and morality. Therefore, regulations in the interest
of public health and order takes the case out of Art. 301.
Article 19(1)(g) in Part III guarantees to every Indian citizen a fundamental right to carry on
trade and business, subject to such reasonable restrictions as may be imposed in the interests
of the general public. Also Articles 301 to 307 of Part XIII of the Constitution are provisions
relating to trade, commerce and intercourse within the territory of India. Article 301
guarantees that trade; commerce and intercourse shall be free throughout the territory of
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India. It imposes a general limitation on the exercise of legislative power, whether of the
Union or of the States, to secure unobstructed flow of trade, commerce and intercourse from
Prima face, it seems that there is some overlapping between Art. 19(1)(g) and Art. 301,
because both aim at the freedom of trade or business, and if either of the provisions is
infringed, the aggrieved individual can seek his remedy from the Court against the offending
(a) While Art. 19(1)(g) confers a fundamental right, Art. 301 confers a justiciable right but
(b) While Art. 19(1)(g) is confined to citizens, Art. 301 extends to all individuals.
In case of emergency, Art 19(1)(g) remains suspended and so the Courts can take recourse to
Art. 301, to adjudge the validity of a restriction on trade, commerce and intercourse.
In some other situations, both provisions may be applicable and it may be possible to invoke
both. Economic situations and conditions being unpredictable, it is not necessary to evolve any
conceptualistic differentiation between the two Articles. Art. 301 is mandatory provision and
any law contravening the same is ultra vires, but it is not a fundamental right and hence is not
In the matter of S. Ahmad v. State of Mysore5, it was held that the three possible alternatives
1. A provision may be valid under Art 301-304, but may be invalid under Art. 19(1) (g); or
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2. It may be invalid under Art. 301-304 as well; or
3. It may be invalid under Art. 301-304, but not under Art. 19(1)(g)
But still a common ground is left where the two articles are bound to overlap; some basis of
distinctions has, therefore, to be found out, particularly when the infringement of either
Prior to the Supreme Court decision in the Automobile case6, the consensus of opinion in
the High Courts, broadly, was that while Art. 19(1)(g) looked at the freedom from the point
of view of the individual, Art. 301 looked at it from the point of view of geographical
barriers or restrictions against the movement of goods, while Art. 19(1)(g) lays down the
rights of the citizen in the matter of profession, trade or business, Art. 301 deals with how the
trade, commerce and intercourse is to be carried on between one place and another, whether
the two places are situated in two States or are inside the same State7.
The majority in the Automobile case, have held the distinction is not so simple. It was not
correct to say that while Art. 19(1)(g) guaranteed an individuals right to carry on his trade
Art. 301 guaranteed a free flow of the volume of trade against geographical barriers. Art. 301
according to the majority, also aimed at the freedom of the individual from restrictions, not
necessarily geographical , - but since regulatory measures were outside the purview of Art.
In Bishamber Dayal Chandra Mohan v. State of U.P8, the freedom under both Art. 19(1)(g)
and 301 is subject to restrictions imposed by the State in the collective interest, which must
also be reasonable and not arbitrary or excessive. These limitations are inherent in both the
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freedoms. Regulatory measures do not constitute restrictions under either provision.
In the matter of Saghir Ahmad v. State of U.P.9, Mukherjea J. was of the view that while
Art. 19(1)(g) deals with the rights of the individuals, Art. 301 provide safeguards for the
However in the matter of Dist. Collector, Hyderabad v. Ibrahim10, the Supreme Court
denounced the theory that Art. 301 guarantees freedom in the abstract and not of the
individuals.
Again in the matter of Motilal v. State of U.P11. and Bapubhai v. State of Maharashtra12,
there was a view that the difference between Art. 19(1)(g) and Art. 301 is that Art. 301 could
be invoked only when an individual is prevented from sending his goods across the State, or
from one point to another in the same state, while Art. 19(1)(g) can be invoked only when the
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complaint is with regard to the right of an individual to carry on business unrelated to, or
irrespective of, the movement of goods, i.e. while Art 301 contemplates the right of trade in
Subject to the other provisions of this part.- This means that while the general rule of
freedom of trade and intercourse is enunciated in Art. 301, it may be subjected to restrictions
imposed by law.
(b) by the State Legislatures, under Art. 304, subject to the limitations prescribed by Arts.
302-302, respectively13.
The scope and content of Art. 301 depends on the interpretation of these three expressions used
The words trade and commerce have been broadly interpreted. In most cases the accent has
Trade, commerce. – Though the word ‘business’ is ordinarily more comprehensive than the
word ‘trade’, they are synonymous with the other. So used, trade or business would mean
some real, substantial and systematic or organized course of activity or conduct with a set
purpose.
‘Intercourse’. – This word is used to give the freedom declared by Art. 301 the largest
import. It thus includes the freedom to import things for personal or commercial use14.
In the matter of Koteshwar v. K.R.B. & Co.15, the Supreme Court held that
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‘a power conferred on the state Government to make an order providing for regulating or
prohibiting any class of commercial or financial transactions relating to any essential article,
clearly permits imposition of restrictions on freedom of trade and commerce and, therefore,
whether the Maharashtra Debt Relief Act, 1976, was constitutionally valid vis-à-vis Art. 301.
This depended on the further question whether money-lending to the poor villagers which
was sought to be prohibited by the Act could be regarded as trade, commerce and
intercourse. The Court answered in the negative although it recognized that money-lending
amongst the commercial community is integral to trade and is, therefore trade. The Court
thus stated:
“In short, State action defending the weaker sections from social injustice and all forms of
exploitation and raising the standard of living of the people, necessarily imply that economic
offered by Art. 301 is confined to such activities as may be regarded a lawful trading activity
and does not extend to an activity which is res extra commercium and cannot be said to be
‘trade’. It cannot include activities which are inherently pernicious, such as trafficking in
women; hiring of goondas for committing crimes, gambling. and that, accordingly, there is
no question of the application of Art. 301 or 304 to laws made for the suppression of such
activities.
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2. Free: -
‘Shall be free’ ‘Freedom’ in this Article does not mean absolute freedom but freedom for
all restrictions except those which are provided in other articles of Part XIII, as well as
regulatory and compensatory measures. The power of the Union of the State to exercise
On the other hand, ‘restriction’ would not be valid if it does not come under Arts. 302-305.
Now, since restrictions under the latter provisions can be imposed only by law the freedom
The Supreme Court emphasized in Atiabari case that Art. 301 provides that the flow of trade
shall run smooth and unhampered by any restriction either at the boundaries of the State, or
at any other point inside the State themselves. The majority judgment emphasized that free
movement and exchange of goods throughout the territory of India is essential for sustaining
The word ‘free’ in Art. 301 cannot mean absolute freedom or that each and every restriction
on trade and commerce is invalid. The Supreme Court has held in Atiabari that freedom of
trade and commerce guaranteed by Art. 301 is freedom from such restrictions as directly and
In the matter of Amrit Banaspati Co. Ltd. V. Union of India18, the Supreme Court observed
that:
“Suffice it to say that it is only when the intra-state or inter-state movement of the persons or
goods are impeded directly and immediately as distinct from creating some indirect or
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freedom envisaged by Art. 301 can arise. Without anything more, a tax law, per se may not
impair such freedom. At the same time, it should be stated that a fiscal measure is not outside
The Supreme Court has ruled that the imposition of sales tax on goods sold within the State
A tax may, in certain cases, directly and immediately impede the movement or flow of trade,
but the imposition of a tax does not do so in every case. It depends on the context and
circumstances. Measures impeding the freedom of trade, commerce and intercourse may be
impediments on the individuals carrying on trade or business, on the business itself, or on the
Any person aggrieved by infringement of Art. 301 can seek his remedy from the court
‘Throughout the territory of India’, these words extend the freedom not only to inter-State
As according to State of Bombay v. R.M.D.C.20, Art. 302 and 304 state the words “territory
of India” in Art. 301 removes all inter-State or intra-State barriers, and brings out the idea
that for the purpose of the freedom of trade and commerce, the whole country is one unit.
Trade cannot be free throughout India if barriers exist in any part of India, be it inter-State or
intra-State.
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Regulatory Measures
Measures which impose compensatory taxes, or, are purely regulatory, do not come within
the purview of 'restrictions' contemplated in Article 301 because they facilitate flow of trade,
rather than hampering it. Such measures, therefore, need not comply with the requirement of
the provisions of Article 304(b). Thus, a State law imposing a tax, for vehicle, on the owners
of motor vehicles does not directly affect the freedom of trade or commerce even though it
indirectly imposes a burden on the movement of passengers and goods within the territory of
Regulatory measures are not regarded as violative of the freedom guaranteed by Art. 301.
The word ‘free’ in Art. 301 does not mean freedom from such regulation as is necessary for
an orderly society. Regulatory measures do not fall within the purview of the restrictions
In the matter of G.K. Krishnan v. State of Tamil Nadu21, the Supreme Court observed:
“there is clear distinction between laws interfering with freedom to carry out the activities
constituting trade and laws imposing on those engaged therein rules of proper conduct or
other restraint directed to the due and orderly manner of carrying out the activities.”
The word ‘regulation’ does not have any fixed or inflexible meaning. It is difficult to define
this word as it has no precise meaning. It is a word of broad import, having a broad meaning
and is very comprehensive in scope. Every case has to be judged on its own fact and its own
facts and in its own setting of time and circumstances. It may be that in some situations even
a ‘prohibition’ may be regarded as being regulatory in nature and not hit by Art. 301.
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In the matter of the State of Tamil Nadu v. Sanjeetha Tarding Co.22, the Supreme Court
unqualified manner. Any prohibition on movement of any article from one State to another
has to be examined with reference to the facts and circumstances of that particular case-
whether it amounts to regulation only, taking into consideration the local conditions
prevailing, the necessity for such prohibition and what public interest is sought to be served
by imposition thereof.”
Remedies for infringement of Art. 301. – 1. Not being a fundamental right, the
infringement of Art. 301 cannot be challenged by a petition under Art. 32. This does not
mean, however, that the individual has no remedy if Art. 301 if infringed. Either an
individual or a State can challenge any legislative or executive action which offends against
2. The doctrine of severability applies where a statutory provision or order violate the
Restrictions upon the freedom.- 1- The limitation imposed upon inter-State freedom of
trade, commerce and intercourse, by the other provisions of Part XIII are –
(b) Even discriminatory or preferential provisions may be made by Parliament, for the
purpose of dealing with a scarcity of goods arising in any part of India (Art. 302(2).
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(c) Non-discriminatory taxes may be imposed by States on imported goods similarly as in
(d) Reasonable restriction may be imposed by a State in the public interest (Art. 304(b).
(e) Restrictions imposed by existing law to continue except insofar as provided otherwise by
order of the President [Art. 305]. Existing laws relating to any matter referred to in Art. 19(6)
(i) Assam Taxation on Goods carried by Roads or Inland Waterways Act, 1954.
(ii) Jute Packaging Material (Compulsory Use in Packing Commodities) Act, 1987:
(iii) Provisos of Rule 2 made under the Mysore Forest Act, 1900.
(i) Andhra Pradesh Sugarcane (Regulation of Supply and Purchase), Act, 1961.
(V) M.P. Sthaniya Kshetra Me Mal Ke Pravesh Par kar Adhiniyam, 1976, S.3.
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Power of Parliament to impose restrictions on trade, commerce and intercourse.
Art. 302. Parliament may by law impose such restrictions on the freedom of trade, commerce
or intercourse between one State and another or within any part of the territory of India as
Therefore, Art. 302 empowers Parliament to impose by law such restrictions on the freedom
of trade, commerce and intercourse between one state and another, or within any part of the
By virtue of Art. 302, Parliament is, notwithstanding the protection conferred by Art. 301,
authorized to impose restrictions on the freedom of trade, commerce and intercourse in the
public interest. Thus, Art. 302 relax the restriction imposed by Art. 301 in favor of
Parliament.
The Sarkaria Commission24 justified the present position in the following words as:
“The need for empowering Parliament to place restrictions on trade and commerce even
within a State is obvious. Ours is a vast country with varying economic potentiality and
responsibility in respect of certain matters may, therefore, entail regulating trade and
commerce even within a State for achieving national objectives. For example there is the
need to protect the interests of the poor and weaker sections of our community like the tribal
people etc. Indiscriminate exploitation of natural resources in one State, for example
denudation of forests, may have far reaching implications for other States which may be
affected by floods, silting up of reservoirs etc. Such situations may require imposition of
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restrictions on trade even within the State. The importance of Parliamentary control over
intra-State trade is also significant where centers of production of certain commodities are
situated entirely within a State but the centers of consumption are located outside the State.”
The requirement of ‘public interest’ in Art. 302 would not present any serious problem in the
way of parliament regulating trade and commerce because of the strong presumption in favor
The majority judgment in Atiabari case even suggested that prima facie the question of
public interest underlying a Parliamentary law imposing restrictions on the freedom of trade
‘may not be justiciable’. If this be the correct approach, then Parliament’s power to decide
what restrictions need be imposed under Art. 302 may be said to be practically unlimited.
But the correctness of the view was doubted in the matter of Kheyerbari25 by the Supreme
Court. In case of Art. 19(1)(g), the concept of public interest is justiciable and there appears
to be no reason why Art. 302 should be treated differently. From a practical point of view,
however, to hold ‘public interest’ as justiciable may not mean much for it is rare for a Court
A person challenging the law will have to show to the Court why it is not required in public
interest, and this, is a difficult task except in the rare case where the law is seen on its face to
In another turn, Parliament enacted the Municipal Corporation Act, 1957, and empowered
the Corporation to levy terminal tax on all goods carried by railway or road in the Union
territory of Delhi from any place outside thereof. The Supreme Court declared the levy valid
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1. It does not impose any direct and immediate impediment on the inter-State movement of
goods and so was not hit by Art. 301 which only hits direct and immediate impediments on
intra-State or inter-State movements of goods or persons. It is true that a tax may in certain
cases, directly and immediately impede the movement or flow of trade, but the imposition of
2. Even if the act ‘directly and immediately’ impedes the movement of the goods, the
statutory provision is saved by Art. 302. There is a presumption that the imposition of a tax is
in public interest26.
The Court has stated that only when the intra-State or inter-State movement of the persons or
goods are impeded directly and immediately as distinct from creating some indirect or
freedom envisaged by Art. 301 can arise, without anything more, a tax law, may not impair
the said freedom. At the same time, it should be stated that a fiscal measure is not outside the
This guarantee of freedom is expressly subject to the other provisions of Part XIII (Articles
302 to 305) of the Constitution. Article 302 enables Parliament to impose restrictions, by
law, on the freedom of trade, commerce and intercourse between one State and another or
within any part of the territory of India as may be required in public interest. But, this power
to place restrictions cannot be used by Parliament to make any law which discriminates
between one State and another or gives preference to one State over another, “by virtue of
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any Entry in the Seventh Schedule relating to trade and commerce” [Article 303(1)]. Clause
(2) of the Article engrafts an exception to the limitation contained in clause (1), in as much as
it permits Parliament to make a law giving preference, or making discrimination between one
State and another, if it is declared by such law that it is necessary to do so for the purpose of
dealing with a situation arising from scarcity of goods in any part of the territory of India.
It was argued in State of Madras v. Nataraja Mudaliar27, that as it hampered trade and
between one State and another, Arts. 301 and 303(1) were infringed. The Court rejected the
argument holding that an act enacted for the ‘purpose of imposing tax which is to be
collected and retained by the State’ does not amount to a law giving preference to one State
over another, or making any discrimination between one State and another, merely because
of varying rates of tax prevailing in different States. Several reasons adduced in support of
1. The flow of trade does not necessarily depend upon the rates of sales tax and various other
2. Referring to Australian cases28 , the Court derived the principle applicable in the Nataraja
case, viz. ‘where differentiation is based on considerations not dependent upon natural or
business factors which operate with more or less force in different localities that the
Art. 302 thus authorize Parliament to mitigate the effect of Art. 301 and Art. 303 does not cut
into Art. 302 much. In the end result, Parliament is left with an abundant capacity to regulate
trade and commerce and it is more akin to the American congress in this respect than to the
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Australian Parliament. Art. 301 is worded on the model of Sec. 92 of the Australian
Constitution, and both provisions restrict Parliament, but then Art. 302, to a very large extent,
(i) Essential Commodities Act, 195529, and Orders made there under.
(ii) Defence of India Act, 1962, and the Rules made there under30.
Regulation and Restriction. - 1. It is now established that even apart from the specific
provisions in Arts. 302 -305, the Union as well as State Legislatures have the power to
exercise legitimate regulatory32 control over the freedom of trade and commerce, which does
not amounts to a restriction. In fact, legitimate regulation does not infringe the freedom
Arts. 302, 304(b): While restrictions obstruct the freedom of movement of inter-State
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The following measures have thus been held to be regulatory –
(a) Police regulations, such as provisions for lighting, rules of the road, etc., which facilitate
(c) Provision for necessary services to enable the free movement, whether charged for or not.
On the other hand, the following have been held to be restriction rather than regulation:
(i) A rule which totally prohibits movement of certain goods during a specified period36.
(ii) Anything which directly hinders the free flow of trade, commerce and intercourse
between any two parts of India, constitutes a restriction within the meaning of Arts. 302, 304
2. A restriction may be valid only if it conforms to the terms of Art. 302 or 304(b), as the
commerce and inter-course among the States, the Court should examine whether the
In the public interest. – 1. This means that even where a restriction imposed by law
imposes a direct burden on the freedom of trade under Art. 301, it may be constitutionally
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valid, if it is required in the public interest, e.g., to prevent evasion of tax, to canalize inter-
2. Article 302 is, however, subject to the condition in Art. 303 that such Union law should
not be discriminatory as between different States except where it is necessary for dealing
3. In order to be protected by Art. 302, the nexus of the law with public interest must be
reasonable, even though that word is not used in Art. 30239. This does not, however, imply
4. If the condition of public interest is satisfied, Art. 302 would authorize both inter-State or
intra-State restriction41.
Limitations imposed by Article 303(1) on the legislative power of Parliament apply to that of
the State Legislatures, also. But, the State Legislatures do not have the exceptional power to
Article 304 carves out two exceptions in favor of the State Legislatures, to the freedom
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A State legislature may by law impose on goods imported from other States or the Union
Territories, any tax to which similar goods manufactured or produced in that State are
Art. 304(a) imposes no ban, but lifts the ban imposed by Arts. 301 and 303, subject to one
condition. Art. 304(a) is thus enabling and prospective. According to Art. 304(a), a State
legislature may by law impose on goods imported from other States any tax to which similar
goods manufactured or produced within that State are subject, as not to discriminate between
For application of Art. 304(b) to a tax on trade, three conditions need to be fulfilled:
1. The Bill has to be introduced or moved in the State legislature with the prior sanction of
the president, or that the Bill has been assented to by the President.
In Automobile Transport42, the Supreme Court compared Art. 304(b) with Art. 302 in the
following words:
“This provision [Art. 304(b)] appears to the State analogue to the Union Parliament’s
authority defined by art. 302. Leaving aside the pre-requisite of presidential sanction for the
validity of State legislation under clause (b) provided in the proviso thereto, there are two
important differences between Art. 302 & Art. 304(b). The first is that while the power of
Parliament under Art. 302 is subject to the prohibition of preferences and discriminations
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decreed by Art. 303(1) unless Parliament makes the declaration contained in Art. 303(2), the
State’s power contained in Art. 304(b) is made expressly free from the prohibition contained
in Art. 303(1), because the opening words of Art. 304 contain a non-obstanate clause both to
Art. 301 and Art. 303. The second difference springs from the fact that while Parliament’s
power to impose restrictions upon Art 302 upon freedom of commerce in the public interest
is not subject to the requirement of reasonableness, the power of the States to impose
restrictions on the freedom of commerce in the public interest under Art. 304 are subject to
Although Article 302 does not speak of reasonable restrictions yet it is evident that the
restrictions contemplated by it must bear a reasonable nexus with the need to serve public
interest. In several recent decisions where the constitutional validity of a law imposing
restrictions under Article 302 was challenged, the Supreme Court did apply the test of
Article 307 empowers Parliament to appoint such authority as it considers appropriate for
carrying out the purposes of Arts. 301, 302, 303 and 304. It can confer on such authorities
307. Some of them consider that such an 'authority' may be useful in the context of
cesses, duties, etc. One of them has also referred to the need for continuous appraisal of the
various fiscal laws as well as executive decisions and measures which the Union and the
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States took from time to time on trade, commerce and intercourse within the country. The
Chambers of Commerce have also emphasized the need for setting up of an authority
The Government of India does not consider it necessary to set up such an authority. The
“Since the situations keep on changing from time to time in the country, the Ministries at the
Centre should be able to respond to such situations more promptly and appropriately because
they have the readily available advice with them of experts, legal opinion, information from
various parts of the country and views of the producing and consuming States, etc. The
establishment of an authority under Article 307, would only cause delays, conflicts and
controversies among the various States/regions. Moreover, the authority if established, can
only be a data collecting, deliberative and advisory body but not a decision making authority
which still shall have to rest with the Central Government. The Department, therefore, does
not consider the necessity of setting up of an authority under Article 307 of the Constitution
Trade, Commerce and intercourse cover a multitude of activities. Actions of the Union and
State Governments have wide-ranging impact on them. Legislative and executive actions in
the field of licencing, tariffs, taxation, marketing regulations, price controls, procurement of
essential goods, channelisation of trade, and controls over supply and distribution, all have a
direct and immediate bearing on trade and commerce. Innumerable laws and executive orders
occupy the field today. This has led to an immensely complex structure. Many issues of
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We are of the view that it would be advantageous to constitute an authority under Article
307 and It should be an expert body. Being removed from the pressures of day to day
administration it would be able to formulate objective views, taking into account the long
term perspective, in regard to various intricate problems relating to trade, commerce and
intercourse. Being an expert constitutional body it would also inspire confidence among the
various States and other interests. Such an expert body would be eminently suited to strike a
proper balance between freedom of trade and the need for restrictions in order to foster
Free flow of trade, commerce and intercourse within and across inter-State borders is an
important pre-requisite for ensuing economic unity, stability and prosperity of a country.
Limitations for the common good are inherent in such freedom, least it should de-generate
Notwithstanding the fact that the word 'reasonable' is not used in Article 302, a low imposing
restrictions under Article 302 would be open to judicial review on the ground that it has no
reasonable nexus with the public interest alleged. The proposal for insertion of the word
'reasonable' before the world 'restriction' in Article 302 is thus merely of theoretical
Intra-State trading activities often have a close and substantial relation to inter-State trade
and commerce. State laws though purporting to regulate intra-State trade may have
implications for inter-State trade and commerce. These may impose discriminatory taxes or
unreasonable restrictions impeding the freedom of inter-State trade and commerce. If clause
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(b) of Article 304 is deleted, the commercial and economic unity of the country may be
broken up by State laws setting up barriers to free flow of trade and intercourse through
The scheme of the Articles in Part XIII, considered as a whole, is well-balanced. It reconciles
the imperative of economic unity of the Nation with interests of State autonomy by carving
out in clauses (a) and (b) of Article 304, two exceptions in favour of State legislatures to the
Considering the intricate nature and the need for objective examination of the wide-ranging
issue connected with the freedom of trade, commerce and intercourse, it is recommended,
that an expert authority should be constituted under Article 307. Among other things, such an
(a) Survey and bring out periodically a report on the restrictions imposed on intra-State and
(b) Recommend measures to rationalize or modify the restrictions imposed to facilitate free
(c) Examine complaints from the public and the trade in this regard; and
(d) Suggest reforms in the matter of imposition, levying and sharing of taxes for purposes of
The ambit of Article 307 is wide enough to bring all matters relevant to freedom and
regulation of trade, commerce and intercourse within the purview of such an authority 'for
carrying out the purposes of Articles 301, 302, 303 and 304'. It is entirely left to the judgment
of parliament to clothe the 'authority' under Article 307 with such powers and duties as may
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be considered necessary. Such an 'authority' may have both an advisory and executive, role
with decision-making powers. To begin with such an authority may be assigned an advisory
role. In course of time in the light of experience gained, such additional powers as may be
Therefore we can say that Articles in the Part XIII of the Indian Constitution make a
complete package to look after the activities of Trade, Commerce and Intercourse in all
respects.
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