All About Inter-State Trade and Commerce

Article 301 to 307, Part XIII of the Indian Constitution provides for freedom of trade, commerce, and intercourse. The general principles of commerce and trade are laid down in Article 301, while the restrictions under which trade operates are outlined in Articles 302 to 305. These provisions were adopted from the Australian Constitution.

An important requirement for economic unity, stability, and prosperity in a two-tier polity is the free movement of trade, commerce, and intercourse within and across interstate borders. The Indian Constitution contains provisions guaranteeing freedom of interstate commerce and trade within India’s borders. The state must provide many facilities, including roads, to ease the flow of interstate commerce and trade. The concept of compensatory and regulatory taxation was developed with the aim of reconciling both the freedom of trade and commerce guaranteed by Article 301 and the necessity to tax this trade at least up to the point where it pays for the facilities provided by the state, such as roads. 

The act of trading involves buying and selling goods for a profit. An activity that is genuinely and systematically organised and structured with a specific aim or motive is what the term “trade” means under Article 301. The term trade is interchangeable with the term business for the purpose of Article 301.

The primary objective of commerce is the transmission of goods, whether by air, water, telephone, telegraph, or any other means. Transportation or transmission of goods is the primary objective of commerce in Article 301, not profit or gain. 

The movement of goods between two locations is called “intercourse.” The term can encompass both commercial and non-commercial movements. Travel and all interactions with others are included. There is some contention, however, that the freedom guaranteed by Article 301 does not encompass intercourse in the fullest sense of the word. 

Meaning of Inter-State Trade and Commerce: An “interstate commerce” is any trade, commerce, transportation, or communication between several States or between any foreign country and one State, or between any State and its own territory or foreign ships.

Article 301 in Indian Law

As stated in Article 301 of the Constitution of India, all trade, commerce, and intercourse are free in the country. The exchange of goods and services between buyers and sellers is referred to as “trade,” as is the transportation of these goods. It is the elements of good transmission and human interaction that are more important in commerce. Consequently, profit is not the most important factor in commerce.

According to Article 301 of the Indian Constitution, the free movement of goods throughout the country is one of the freedoms as long as those goods are not damaged. Hence, the word “intercourse” has been included to clarify the intention of the Constitution makers.

The term “free” in article 301 does not mean absolute freedom, nor does it imply that restrictions on trade or commerce are invalid. As the Supreme Court found in Atiabari, the guarantee of freedom of trade and commerce by Article 301 includes freedom from restrictions that impede the flow of or restrict the free movement of commerce. Thus, Article 301 would not apply if a law interferes with trade, commerce, and intercourse indirectly or inconsequentially.

In Article 301, the word “free” does not mean that regulations are not to be imposed. According to the supreme court, “there is a clear difference between the law that interferes with the freedom to carry out trade activities and the law that imposes appropriate rules of conduct on those engaging in such activities.” Among the examples of regulatory laws that are not applicable to Article 301 are the regulation of hours, equipment, weight, size of the load, lights, and traffic laws.

Conclusion

Under Part XIII of the Indian Constitution, the provisions pertaining to freedom of commerce, trade, and intercourse are laid down. In order to encourage free commerce and trade in our country, the purpose of this provision is to eliminate border barriers between states and create a single federation. The Constitution cannot guarantee absolute freedom of trade. The freedom of the individual has limitations for the purpose of the common good, to avoid devolving into a self-defeating licence. Therefore, legitimate regulatory measures are not regarded as limiting freedom. In a nutshell, Part XIII includes well-balanced articles. The federal government strikes a balance between the interests of national economic unity and national autonomy.