Part XIII of the Constitution of India (Articles 301 to 307)

Part XIII of the Constitution of India (Articles 301 to 307) deals with the freedom of trade, commerce, and intercourse across the territory of India. These provisions are critical for maintaining the economic unity and integration of the country, ensuring that States do not impose barriers that would hinder the free flow of goods and services.

Article 301 – Freedom of trade, commerce, and intercourse

• Text: “Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free.”
• Purpose: Ensures economic integration by prohibiting both the Union and States from creating unreasonable trade barriers.
• Applies to:
  • Movement of goods
  • Commercial intercourse
  • Economic activities across State borders

Important Case:

• Atiabari Tea Co. v. State of Assam (1961)
  • Held that any law that directly or indirectly restricts the free movement of goods is unconstitutional unless it meets the exceptions under Articles 302–305.

Article 302 – Power of Parliament to impose restrictions

• Allows: Parliament to impose reasonable restrictions in the public interest on the freedom declared under Article 301.
• Purpose: Enables Parliament to safeguard national priorities (e.g., public health, safety, economic stability).
• Must be justified as ‘reasonable’.

Use Case: During a public emergency or to ensure fair distribution of essential commodities.

Article 303 – Restrictions on discrimination between states

• Clause (1): Prohibits both Parliament and State Legislatures from making laws that give preference to one State over another or discriminate between States.
• Clause (2): Exception – Parliament may make discriminatory laws only if necessary to deal with a scarcity of goods in any part of India.

Purpose: Prevent economic favoritism and maintain federal balance.

Article 304 – Restrictions by states on trade

• Clause (a): States may impose taxes on goods imported from other States only if similar goods produced within the State are also taxed.
• Clause (b): Allows States to impose reasonable restrictions on trade in the public interest, with Presidential assent.

Example: A state cannot impose higher taxes on wheat from other states than it does on its own.

Important Case:

• State of Kerala v. Abdul Kadir (1976) – Restrictions imposed under Article 304(b) must be reasonable and with Presidential assent.

Article 305 – Saving of laws relating to state monopolies

• Protects: Laws related to State monopolies in trade, business, industry, or services, even if they restrict freedom under Article 301.
• Purpose: To enable States to create public enterprises or monopolies (e.g., electricity boards, liquor distribution).

Not Absolute: Cannot override Articles 301–304 arbitrarily.

Landmark Case:

• R.M.D. Chamarbaugwalla v. Union of India (1957) – Courts will examine whether a State monopoly violates constitutional limits.

Article 306 – Repealed

• Related to agreements with Indian States and princely states on trade – deleted by the 7th Amendment (1956).

Article 307 – Appointment of authority for inter-State trade

• Empowers Parliament to appoint an authority (like a tribunal or commission) to:
  • Ensure compliance with Articles 301–304
  • Resolve disputes related to trade barriers
• Implementation mechanism – not commonly used but remains important in federal coordination.

Note: No permanent body has been created so far under this article.

Landmark Judgments on Part XIII:

1. Atiabari Tea Co. v. State of Assam (1961)
   • Defined freedom of trade as a fundamental economic principle.
   • Held that taxation that restricts trade violates Article 301.
2. Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan (1962)
   • Clarified that regulatory taxes (e.g., for road upkeep) do not violate Article 301 unless excessive.
3. State of Madras v. Nataraja Mudaliar (1968)
   • Upheld reasonable taxation under Article 304(a), as long as it doesn’t discriminate.
4. Jindal Stainless Ltd. v. State of Haryana (2016)
   • A nine-judge bench ruled that entry taxes are valid under Article 304(a) if non-discriminatory and not arbitrary.
   • Reaffirmed that freedom under Article 301 is not absolute.

Summary of Key Principles: