CONSTITUTIONAL LAW 2 notes
CONSTITUTIONAL LAW 2 notes
Trade
The concept of "trade" under Article 301 refers to the
organized buying and selling of goods with the primary goal of
profit-making. This definition highlights trade as a structured
and purposeful activity, fundamental to economic transactions.
In the context of the Constitution, "trade" is often used
interchangeably with "business," emphasizing its role in driving
economic activity and growth. The freedom to trade without
undue restrictions ensures that businesses can operate
efficiently across state borders, contributing to the national
economy's vibrancy.
Commerce
"Commerce" within the meaning of Article 301 pertains to the
transmission or movement of goods through various means,
including air, water, and communication networks such as
telephone or telegraph. The focus here is not on the profit
derived from these activities, but on the essential act of
transportation and transmission itself. Commerce is critical to
linking different parts of the country, allowing goods and
services to reach markets across vast distances. This
unrestricted flow is vital for economic integration, ensuring
that no part of the country is economically isolated.
Intercourse
The term "intercourse" as used in Article 301 is broader,
referring to the movement of goods, people, and services from
one place to another, encompassing both commercial and non-
commercial activities. It includes various forms of interaction,
such as travel and communication. However, in the
constitutional context, "intercourse" is interpreted in a more
limited sense, focusing on "commercial intercourse" rather
than unrestricted movement. This interpretation is reinforced
by the fact that "intercourse," unlike "trade" and "commerce,"
is not explicitly covered as a subject of legislation under the
Seventh Schedule of the Constitution. This narrower
interpretation ensures that the term is aligned with the overall
goal of facilitating organized economic activities rather than
unregulated movement.
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AIR 1957 SUPREME COURT 699
RELATIONSHIP BETWEEN ARTICLE 301 AND ARTICLE 19(1)(G)
2
Australian Constitution. (1900). Section 92. Commonwealth of Australia.
suspended. In such situations, the courts rely on the provisions
of Article 301 to determine whether any violation of rights has
occurred.
3
AIR 1967 RAJ 104
health and safety, particularly during a time of national need.
The Court upheld these measures, emphasizing that Parliament
has the authority to regulate trade and commerce when
necessary in the public interest. This case demonstrates how
Article 302 can be applied to address specific concerns while
balancing the need for regulation against the broader principle
of free trade.
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AIR 1964 SUPREME COURT 1006
reasonable and rational, and they must serve the public
interest. These conditions are designed to ensure that state-
level restrictions on trade do not undermine the principles of
fairness and equity or impede the free flow of goods and
services across the country.
Facts:
In the case of Atiabari Tea Co. Ltd. vs. The State of Assam6, the
Assam Taxation Act imposed a tax on goods transported
through inland waterways and roads within the state. The
petitioner, Atiabari Tea Co. Ltd., was engaged in the business of
transporting tea from Assam to Calcutta (now Kolkata). As the
tea was transported through Assam on its way to Calcutta, it
became subject to taxation under the Assam Taxation Act. The
company challenged the validity of this tax, arguing that it
infringed upon the freedom of trade, commerce, and
intercourse guaranteed by the Indian Constitution.
Issues:
The case raised two significant constitutional questions. First,
whether the Assam Taxation Act of 1954 violated Article 301 of
the Indian Constitution, which guarantees the freedom of trade,
commerce, and intercourse throughout India. Second, whether
the Act could be justified under Article 304(b), which allows
states to impose reasonable restrictions on trade, commerce,
and intercourse if such restrictions are in the public interest
and have received the President's sanction.
Judgment:
The Supreme Court held that the Assam Taxation Act imposed a
tax that directly and immediately restricted the free movement
of goods, thereby violating Article 301 of the Constitution. The
Court emphasized that any law restricting trade, commerce, or
intercourse must comply with the conditions set out in Article
304(b). This includes obtaining the President's prior approval
6
AIR 1961 SUPREME COURT 232
before a state enacts such a law. In this case, the Assam
Taxation Act did not meet the requirements of Article 304(b) as
it lacked the necessary presidential sanction.
Facts:
In the case of Automobile Transport Ltd. vs. The State of
Rajasthan7, the State of Rajasthan imposed an annual tax on
motor vehicles. The tax rates were set at Rs. 60 for a motor
vehicle and Rs. 2000 for a goods vehicle. The appellant,
Automobile Transport Ltd., challenged the validity of this tax,
arguing that it violated Article 301 of the Indian Constitution,
which guarantees the freedom of trade, commerce, and
intercourse throughout the country.
Issue:
The central issue in this case was whether the tax imposed by
the State of Rajasthan was constitutionally valid under Article
301, or if it constituted an unreasonable restriction on the
freedom of trade and commerce.
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AIR 1962 SUPREME COURT 1406
Judgment:
The Supreme Court held that the tax imposed by the State of
Rajasthan was valid. The Court reasoned that the tax was a
regulatory measure or a compensatory tax, aimed at facilitating
the smooth operation of trade, commerce, and intercourse.
The Court explained that such taxes are essential for
maintaining the financial stability of the state and are intended
to compensate for the use of state resources, such as roads and
infrastructure, by motor vehicles.
Facts:
In The State of Mysore vs. Sanjeeviah8, the government of
Mysore, under the Mysore Forest Act of 1900, enacted a law
that prohibited the movement of forest produce between
sunrise and sunset. This law aimed to control and manage the
transportation of forest products within the state.
Issue:
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AIR 1967 SUPREME COURT 1189
The main issue in this case was whether the law banning the
movement of forest produce during specific hours was a
violation of the freedom of trade, commerce, and intercourse
guaranteed under Article 301 of the Indian Constitution.
Judgment:
The Supreme Court held that the law was unconstitutional and
declared it void. The Court observed that the law was
restrictive rather than regulatory, thereby infringing upon the
freedom guaranteed under Article 301. The judgment
emphasized that while states have the authority to regulate
trade and commerce to a reasonable extent, any law that
imposes a restriction without justification or reasonableness
would be deemed violative of Article 301. In this case, the
restriction on the movement of forest produce was not a mere
regulation but a substantial impediment to free trade, and
therefore, the law was struck down as unconstitutional.
Facts:
In the case of G.K. Krishna vs. State of Tamil Nadu9, the
government of Tamil Nadu issued a notification under the
Madras Motor Vehicles Act, increasing the motor vehicle tax on
omnibuses from Rs. 30 to Rs. 100. The government's
justification for this increase was to curb unhealthy competition
between omnibuses and regular stage carriage buses, as well as
to prevent the misuse of omnibuses.
Issues:
The petitioner raised two key issues:
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AIR 1975 SUPREME COURT 583
2. Whether the increased tax acted as a barrier to the
freedom of trade, commerce, and intercourse as
guaranteed under Article 301 of the Indian Constitution.
Judgment:
The Supreme Court held that the increased tax on omnibuses
was compensatory or regulatory in nature and, therefore, did
not violate the freedom of trade, commerce, and intercourse
guaranteed under Article 301. The Court explained that such
taxes are not barriers to trade but rather facilitate it by
ensuring safe and efficient transportation infrastructure.