Discuss the scope and extent of the freedom of trade, commerce and intercourse under the Constitution.

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freedom of trade
Discuss the scope and extent of the freedom of trade, commerce and intercourse under the Constitution.

Ans. Scope of freedom of trade & commerce.—Article 301 of the Constitution lays down that trade, commerce and intercourse throughout the territory of India shall be free. Article 301 applies not only to Inter-State but also Inter-State trade, commerce and intercourse. The freedom guaranteed by Article 301 is freedom from all restrictions except those which are provided for from Articles 302 to 305. Restriction from which the freedom is guaranteed should be such restriction as directly and indirectly restrict the free flow of movement of trade and not from incidental or direct restriction. Automobile Transport v. Slate of Rajasthan, (A.I.R. 1962 S.C. 406). The word ‘free’ in Art. 301 does not mean freedom from regulation. A purely regulatory and comepensatory law can not be regarded as violative of the freedom of trade and commerce. Such laws are intended merely to regulate trade and commerce, they intend to facilitate, and not to restrict or restrain freedom of trade. In Atiabari Tea Co. v. State of Assam. A.I.R, 1961 S.C. 232, the petitioner was carrying on the business of growing tea and exporting it to Calcutta via Assam. While passing through Assam it was liable to tax. The Supreme Court held that the impugned law undoubtedly levies tax directly and immediately on the movements of goods and, therefore, came within the purview of Art. 301. The Act was, therefore, held void. Only such taxes or restrictions which directly or immediately impede the free-flow of trade, commerce and intercourse would fall within the purview of Art. 301. Such taxes could be levied if the requirements of Art. 304 (b) are satisfied. In Automobile Transport Ltd. v. State of Rajasthan, A.I.R. 1962S.C. 1405, the validity of the Rajasthan Motor Vehicles Taxation Act, 1951 was challenged. This Act imposes a tax on all motor vehicles used and kept within the State of Rajasthan. The Court held the tax as valid as they are only regulatory measures imposing compensatory taxes for facilitating trade, Commerce and intercourse. In State of Bihar v. Harihar Prasad Debuka (1989) 2SCC the Supreme Court held that the Notification issued by the Bihar Government requiring permit for vehicles transporting goods in the State of Bihar from other States was a regulatory measure and hence not violative of Arts. 301 and 304 of the Constitution.

The court also lays down the following principles;

1. Article 301 assuems both inter-State and inter-State trade, commerce and intercourse.

2. Trade, commerce and intercourse include both movement of goods and persons.

3. The freedom is not from all the tax laws.

4. Only those laws which directly and immediately impede the free-flow of the trade are void.

5. Law which are merely regulatory or compensatory and facilitate freedom of trade are out-side the scope of Art. 301.

Restrictions on trade and commerce.—Article 301 is subject to the restrictions imposed under Articles 302 to 305 :—

(1) Parliament’s power to regualte trade and commerce in the public interest.—Art. 301 empowers Parliament to impose such restrictions 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 the public interest. The concept of ‘Public interest’ is not a justiciable issue. The power of Parliament under Art. 302 is limited by Art. 303. Article 303 (1) provides that Parliament shall not have power to make any law giving any preference to any one State over another by virtue of any Entry relating to trade and comemrce in any of the list. But under Cl. (2), the Parliament may, however, discriminate among States if it is declared by a law that it is neces-sary to do so for the purpose dealing with a situation arising out of scarcity of goods in any part of the territory of India.

(2) State’s power to regulate trade and commerce.—Article 304 (a) empowers the State to impose any tax on goods imported from other State 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. Clause (2) empowers the State to impose restrictions in the public interest. But the Bill for this purpose can be introduced in the State Legislature only with the previous per-mission of the Parliament.

(3) 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.