Part 13 of Indian Constitution, Article 301 to 307, Amendments

Part 13 of Indian Constitution (Articles 301-307) deals with trade and commerce within India. It ensures the free flow of goods and services across the country to maintain economic unity. At the same time, it permits reasonable restrictions in the public interest.

Part 13 of Indian Constitution

Part 13 of Indian Constitution (Articles 301-307) deals with Trade, Commerce and Intercourse within the territory of India. It aims to ensure that goods and services can move freely from one state to another without unnecessary barriers. This helps in maintaining economic unity and integration in the country. At the same time, the Constitution allows Parliament and State Legislatures to impose reasonable restrictions in the public interest. For example, restrictions may be imposed for public health, safety or through certain taxes.

Articles Under Part 13 of Indian Constitution

Part 13 (Articles 301-307) of the Indian Constitution deals with Trade, Commerce and Intercourse within the territory of India are discussed below:

• Article 301: It states that, subject to the other provisions of Part XIII, trade, commerce and intercourse throughout the territory of India shall be free.
• Article 302: It states that Parliament has the power to make laws to restrict trade, commerce or movement of goods between states or within any part of India, if it is necessary in the public interest.
• Article 303: This provision deals with restrictions on the legislative powers of the Union and the States regarding trade and commerce under Article 303 of the Constitution.
  • 303 (1): states that neither Parliament nor any State Legislature can make a law that gives preference to one State over another or discriminates between States in matters of trade and commerce. This ensures equality among States.
  • 303 (2): It provides an exception. Parliament can make such a law if it declares that it is necessary to deal with a situation of scarcity of goods in any part of India.
• Article 304 : Restrictions on trade, commerce and intercourse among States
  • (a) states that a State Legislature can impose tax on goods coming from other States or Union Territories. However, the tax must be equal to the tax imposed on similar goods produced within that State. 
  • (b) allows a State to impose reasonable restrictions on trade and commerce within the State or with other States if it is necessary in the public interest. However, before introducing such a law, the State must take the prior approval of the President.
• Article 305: Saving of existing laws and laws providing for State monopolies. This provision under Article 305 states that the freedom of trade under Articles 301 and 303 will not affect existing laws, unless the President directs otherwise. It also protects laws made before the Constitution (Fourth Amendment) Act, 1955, especially those related to State monopolies under Article 19(6)(ii).
• Article 306: Power of certain States in Part B of the First Schedule to impose restrictions on trade and commerce Omitted by the Constitution (Seventh Amendment) Act, 1956.
• Article 307: Appointment of authority for carrying out the purposes of articles 301 to 304. Under this article Parliament can appoint an authority to implement the provisions of Articles 301 to 304 related to trade and commerce. It can also give this authority the necessary powers and duties.

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Amendments Related to Part 13 of Indian Constitution

The following section discusses the key constitutional amendments that have impacted Part 13 of the Indian Constitution. The amendment has shaped the scope and operation of economic federalism and trade regulations in India.

7th Constitutional Amendment Act, 1956

• The 7th Constitutional Amendment Act, 1956 removed Article 306, which earlier allowed certain Part B States to impose restrictions on trade and commerce.
• This amendment was part of the larger reorganization of states in 1956, which reorganized state boundaries mainly on linguistic basis. With the removal of Article 306, special powers given to some states to levy duties on goods were abolished.

Significance

• It helped in promoting economic unity in the country.
• It removed special trade privileges of certain states.
• It supported the idea of a common national market.
• It strengthened the principle of equality among states in matters of trade and commerce.

Case Laws Related to Part 13 of Indian Constitution

• Atiabari Tea Co. Ltd. v. State of Assam (1961): The issue was whether the Assam tax on goods carried by road and waterways violated Article 301, which guarantees freedom of inter-state trade. The Supreme Court held that the tax directly restricted free trade and was invalid because it did not follow the conditions under Article 304(b), such as prior Presidential sanction. This case strengthened the principle of free trade and economic unity in India.
• Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan: The Supreme Court held that taxes on motor vehicles under the Rajasthan Motor Vehicles Taxation Act were valid. It ruled that compensatory and regulatory taxes, which are used to maintain roads and transport facilities, do not violate Article 301 because they help trade rather than restrict it. The Court clarified that only taxes which directly and immediately hinder the free flow of trade would be unconstitutional.
• State of Madras v. N.K. Nataraja Mudaliar (1968): The Court held that the sales or purchases made by an assessee which actually took place in the course of inter-State trade or commerce could not be taxed by any State until by law it was otherwise provided by Parliament.
• Jindal Stainless Ltd. v. State of Haryana (2016): The Court ruled that entry taxes imposed by States are constitutional as long as they do not discriminate unfairly and are meant to create a level playing field between local goods and goods coming from other States. Such taxes do not violate Article 301, which guarantees freedom of trade and commerce.