Freedom of Trade and Commerce: Articles 301-307

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Freedom of Trade and Commerce: Articles 301-307

The Indian Constitution, through Articles 301 to 307, ensures the freedom of trade, commerce, and intercourse across the nation. These provisions aim to create a unified economic space, facilitating the seamless movement of goods and services throughout India.

MEANING, DEFINITION & EXPLANATION

Trade: Refers to the buying and selling of goods and services with the intent of earning profit. It encompasses all activities related to the exchange of commodities.
Commerce: Involves the transmission or movement of goods, services, and people by various means such as air, water, or land. Unlike trade, commerce emphasizes the transportation aspect rather than profit-making.
Intercourse: Denotes the movement and interaction of people, goods, and information across regions. It includes both commercial and non-commercial interactions, ensuring the free flow of communication and exchange.

HISTORICAL BACKGROUND / EVOLUTION

The framers of the Indian Constitution drew inspiration from Section 92 of the Australian Constitution, which emphasized free trade among states. Recognizing the importance of economic unity for a diverse nation like India, they incorporated Articles 301 to 307 to eliminate internal trade barriers and promote a cohesive economic environment.

LEGAL PROVISIONS / PROCEDURE / SPECIFICATIONS / CRITERIA

Article 301: Guarantees that trade, commerce, and intercourse throughout India shall be free, ensuring unrestricted movement across state boundaries.
Article 302: Empowers Parliament to impose restrictions on this freedom in the interest of the public, allowing for regulations that serve the greater good.
Article 303: Prohibits both Parliament and state legislatures from enacting laws that give preference to one state over another or discriminate between states, ensuring fairness in legislative actions.
Article 304:
- Allows state legislatures to impose taxes on goods imported from other states, provided they do not discriminate against such goods and that similar goods produced within the state are subjected to the same taxes.
- Additionally, states can impose reasonable restrictions on trade in the public interest with the President’s prior approval.
Article 305: Protects existing laws and state monopolies from the provisions of Articles 301 to 304, ensuring continuity of pre-existing regulations.
Article 307: Authorizes Parliament to appoint an authority to oversee and ensure the provisions related to trade and commerce are effectively implemented.

DEFENCES / EXCEPTIONS / EXCEPTIONS TO DEFENCES

While Article 301 provides for free trade, certain exceptions exist:

Regulatory Measures: Laws that facilitate trade by ensuring safety, security, and order, such as traffic regulations, are permissible.
Compensatory Taxes: Taxes levied to cover the cost of facilities provided for trade, like tolls for road maintenance, are allowed as they do not hinder trade but rather support it.
Public Interest Restrictions: Both Parliament and state legislatures can impose restrictions deemed necessary in the public interest, such as measures to address public health concerns or scarcity of goods.

CASE LAWS / PRECEDENTS / OVERRULING JUDGMENTS

Atiabari Tea Co. Ltd. v. State of Assam (1961):
The Assam Taxation Act imposed a tax on the carriage of goods, including tea, through the state. The Supreme Court held that such taxes directly impede the free flow of trade, violating Article 301.
- Key Holding: This case established that any law directly restricting trade movement is unconstitutional.
Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan (1962):
The state imposed a tax on motor vehicles transporting goods. The Supreme Court ruled that regulatory measures or compensatory taxes that facilitate trade, such as road maintenance fees, do not violate Article 301.
- Key Clarification: This judgment clarified the distinction between permissible regulatory measures and impermissible trade barriers.
State of Bombay v. R.M.D. Chamarbaugwala (1957):
The issue was whether gambling activities could be considered trade or commerce. The Supreme Court held that gambling is not trade or commerce and thus does not enjoy the protection of Article 301.
- Key Outcome: This case delineated the scope of activities covered under trade and commerce.

DOCTRINES / THEORIES

Doctrine of Res Extra Commercium:
This doctrine refers to activities that are outside the realm of commerce. The Supreme Court, in the R.M.D. Chamarbaugwala case, applied this doctrine to gambling, stating that activities inherently immoral or against public policy do not qualify as trade or commerce and thus aren’t protected under Article 301.

MAXIMS / PRINCIPLES

Principle of Economic Unity:
The constitutional provisions aim to maintain India’s economic unity by ensuring free trade across states, preventing economic fragmentation, and promoting national integration.
Non-Discrimination Principle:
Articles 303 and 304 emphasize that no preference or discrimination should be made between states, ensuring equal treatment in trade matters across the nation.

AMENDMENTS / ADDITIONS / REPEALING

Article 306, which provided special provisions for trade and commerce in certain states, was repealed by the Constitution (Seventh Amendment) Act, 1956.