This article has been written by Ms. Vaaghdevi, a student studying B.A.LLB from Damodaram Sanjivayya National Law University, Visakhapatnam. The author is a 1st-year law student.

Introduction:

The unrestricted flow of trade, business, and interpersonal relations both inside and across interstate boundaries is a crucial condition for economic unification, stability, and prosperity in a two-tier polity. A precondition for both national and global economic growth is the unrestricted flow of commerce across borders. The Indian political system is federal in design. However, an agreement is required to ensure harmonization and smooth inter-state trade and commerce. Therefore, the Central Government is responsible for inter-State trade and commerce as well as some aspects of intra-State trade and commerce. The Indian Constitution has clauses ensuring the freedom of intrastate and interstate trade. The articles 14 through 19 also have anything to do with business and trade. The Centre is tasked with overseeing inter-State trade and commerce in order to prevent tensions and restrictions from arising from inter-State rivalry and competitiveness. Although the Indian Constitution states in broad terms that trade and commerce should be unrestricted, the Center and the States (particularly the former) have the power to regulate. To facilitate the flow of interstate trade and commerce, the state must build a number of infrastructures, including roadways.  

The Indian Constitution’s Part XIII, Articles 301 to 307, guarantees freedom of trade, commerce, and intercourse. Article 301 lays forth the fundamental principles of commerce and trade, whereas Articles 302 to 305 describe the limitations on trade. The provisions in this section were adapted from the Australian Constitution.

Article 301:

The 3 main words used in the article are 

i.Trade :

Trading is the act of purchasing and reselling items in order to make money. Under Article 301, the term “trade” refers to an activity that is really and consistently organised and structured with a particular goal or objective. For the purposes of Article 301, the terms “trade” and “business” are synonymous.

ii. Commerce:

Transmission of products, whether by air, sea, telephone, telegraph, or any other means, is the main goal of commerce. According to Article 301, the main goal of commerce is transportation or transmission of things, not profit or gain.

iii. Intercourse:

“Intercourse” refers to the transit of products between two sites. The phrase can refer to both for-profit and nonprofit movements. Travel and all social contacts are included. However, there is significant debate as to whether or not intercourse in the truest sense of the word is included by the freedom given by Article 301.

The term “interstate commerce” refers to any trade, commerce, transportation, or communication between two or more States, between two or more foreign countries, between one State and its own territory, or between foreign ships.

According to Article 301 of the Indian Constitution, all trade, commerce, and intercourse are free in India. As long as the commodities are not harmed, the free movement of goods across the nation is one of the liberties guaranteed by Article 301 of the Indian Constitution. As a result, the term “intercourse” has been added to make the Constitution’s framers’ purpose clear. Article 301’s use of the word “free” does not imply total freedom or the nullity of regulations governing trade or commerce. According to the Supreme Court’s ruling in Atiabari, Article 301’s protection of freedom of trade and commerce also encompasses freedom from limitations that obstruct or limit the free flow of business.Therefore, if a legislation interferes with trade, commerce, or intercourse indirectly or incidentally, Article 301 would not be applicable.

This provision’s goal is to remove state-to-state border restrictions and establish an unified federation in order to promote free trade and commerce in our nation. The complete freedom of trade cannot be guaranteed by the Constitution. Individual freedom is subject to restrictions for the benefit of society as a whole in order to prevent it from turning into a self-defeating licence. As a result, reasonable regulatory restrictions are not seen as impeding freedom. In a nutshell, Part XIII has thoughtful content. The aims of national economic unity and national autonomy are balanced by the federal government.

Restrictions to trade and commerce:

Article 14 of the Constitution, which ensures equality before the law and equal protection of the laws, is the first constitutional provision that places limitations on legislative authority with regard to trade and commerce. Second, Article 19, among other things, grants every citizen the freedom to practice any trade, business, or profession, subject to any reasonable limits that may be imposed in the benefit of the public at large. It is important to note that there is more to it than just a little aspect of prejudice (between groups). Additionally, the restriction must be logical and beneficial to the wider population. More evidence of limitations on the legislative or executive may be found in Articles 301-304.

Article 302:

In accordance with Article 302, the Parliament has the authority to establish limitations on the freedom of trade, commerce, or intercourse conducted inside a state or among states anywhere within Indian territory. These limitations may only be applied with fair consideration for the general public’s interests. Only the Parliament has the authority to determine whether or not a certain action is in the public interest.

Article 303:

Article 303 limits the authority of the Parliament as stated in Article 302. According to Article 303(1), the Parliament is not authorized to pass legislation that would maintain the superior position of one State over another State as a result of an admission in trade or commerce into any of the lists in the seventh schedule. Although there is a shortage of commodities in some areas of the country, Clause (2) stipulates that the Parliament may act if it is declared by law that it is necessary to create such laws or regulations. The authority to determine whether or not there is a shortage of products in certain areas of the territory is placed in the hands of the parliament.

Article 304:

Article 304, clause (a), provides that 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 subject. However, this must not discriminate between goods so imported and goods so manufactured or produced. This article permits State legislatures, by law, to impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State, as may be required in the public interest. At the same time, under the proviso to Article 304(b), no Bill or amendment for the purpose of Article 304(b) shall be introduced or moved in a State legislature, without the prior sanction of the President. A law passed by the State to regulate interstate trade must thus fulfill the following conditions-

• An approval from the President must be taken beforehand,
• The restriction must be sensible and rational,
• It must be in the interests of the public.

These conditions make it clear that the Parliament’s power to regulate trade and commerce is superior to the State’s power.

Article 305:

Article 305 of the Indian constitution saves already formed laws and laws providing for State monopolies. Article 305 can only do so until the President is not ordering something opposite to it or otherwise to the law already formed.

Article 307:

The provisions of Articles 301, 302, 303, and 304 may be carried out by any authority that the Parliament considers appropriate, according to Article 307 of Part XIII. The Parliament may also provide these authorities the responsibilities and authority that it deems necessary.

Difficulties in Inter-State trade relations:

 With the goal of balancing both the freedom of trade and commerce granted by Article 301 and the requirement to tax this trade at least up to the degree where it pays for the infrastructure given by the state, such as roads, the notion of compensating and regulatory taxes was devised. However problems arose due to this provision. 

       An uninterrupted flow of inter-State trade and commerce should be reflected in the Indian corporate landscape. This doesn’t take place. Indian business, particularly the transport sector, has voiced complaints about concerns with taxation (both at the federal and state levels), state control of the transportation of products, and frequent halts and delays caused by administrative regulations and inspection organizations. Transportation and transaction expenses rise as a result of excessive taxation and delays, driving up the ultimate cost of the good and distorting competitiveness in the home market. The majority of grievances relate to the road industry, which is predominantly in the private sector. Railways are a distinct idea, and this work is not concerned with them. However, although they only make up a small portion of surface transport waterways, inland waterway owners often complain about comparable issues.

References:

1,Trade, Commerce and intercourse within the territory of India (no date). Available at: http://interstatecouncil.nic.in/wp-content/uploads/2015/06/CHAPTERXVIII.pdf (Accessed: February 12, 2023). 

2.  Limited, L.P. (no date) Constitutional provisions regarding trade, Commerce & Intercourse: A contemporary overview, LinkedIn. Available at: https://www.linkedin.com/pulse/constitutional-provisions-regarding-trade-commerce-intercourse-?trk=pulse-article_more-articles_related-content-card (Accessed: February  12, 2023). 

3. “BARRIERS TO INTER-STATE TRADE AND COMMERCE – THE CASE OF ROAD TRANSPORT” (no date). Available at: https://legalaffairs.gov.in/sites/default/files/Barriers%20to%20Inter-State%20Trade%20&%20Commerce%20%E2%80%93%20The%20Case%20of%20Road%20Transport.pdf. 

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