Part XIII: Trade, Commerce and Intercourse
Contains provisions to ensure the free flow of trade, commerce, and intercourse throughout the territory of India. This part establishes the constitutional framework for creating and maintaining a single, unified economic territory by preventing artificial barriers between states while allowing for reasonable restrictions in the public interest.
Freedom of Trade, Commerce and Intercourse
Freedom of trade, commerce and intercourse
Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free. This is the foundational article of Part XIII and establishes the principle of a common economic market within India.
Power of Parliament to impose restrictions on trade, commerce and intercourse
Parliament may by law impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest. This provides a constitutional basis for reasonable restrictions on the freedom guaranteed by Article 301.
Restrictions on the legislative powers of the Union and of the States with regard to trade and commerce
(1) Neither Parliament nor a State Legislature shall have power to make any law giving, or authorizing the giving of, any preference to one State over another, or making, or authorizing the making of, any discrimination between one State and another, by virtue of any entry relating to trade and commerce. (2) This restriction does not apply if Parliament declares such law necessary for dealing with a scarcity of goods in any part of India.
Restrictions on trade, commerce and intercourse among States
Notwithstanding anything in article 301 or article 303, the Legislature of a State may by law: (a) impose on goods imported from other States any tax to which similar goods manufactured or produced in that State are subject, so as not to discriminate between goods so imported and goods so manufactured or produced; (b) 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.
Saving of existing laws and laws providing for State monopolies
Nothing in articles 301 and 303 shall affect the provisions of any existing law except in so far as the President may by order otherwise direct. Also, nothing in article 301 shall affect the operation of any law made before the commencement of the Constitution (Fourth Amendment) Act, 1955, in so far as it relates to, or prevent Parliament or a State Legislature from making any law relating to, any such matter as is referred to in sub-clause (ii) of clause (6) of article 19.
Appointment of authority for carrying out the purposes of articles 301 to 304
Parliament may by law appoint such authority as it considers appropriate for carrying out the purposes of articles 301, 302, 303 and 304, and confer on the authority so appointed such powers and such duties as it thinks necessary.
🚚 Key Concepts in Part XIII: Trade, Commerce and Intercourse
Core Principle (Article 301)
- Economic Unity: Creates a single, unified economic territory across India.
- Scope: Applies to all forms of trade, commerce, and intercourse.
- Purpose: Prevents economic balkanization and promotes national integration.
Permissible Restrictions
- By Parliament (Art. 302): In the public interest.
- By States (Art. 304): Reasonable restrictions in public interest; non-discriminatory taxes.
- Exceptions (Art. 303): To deal with scarcity of goods.
Constitutional Balance
- Prohibition: No preference or discrimination between states (Art. 303).
- State Monopolies: Protected under Article 305.
- Enforcement: Parliament may appoint authority (Art. 307).
📝 Constitutional Significance
Part XIII plays a crucial role in India's economic integration by constitutionally mandating a common market. The freedom guaranteed by Article 301 is not absolute but is balanced by the power to impose reasonable restrictions in the public interest. This framework prevents states from creating protectionist barriers against goods and services from other states while allowing for necessary regulatory measures. The provisions ensure that India functions as an integrated economic unit while respecting the federal structure. The introduction of the Goods and Services Tax (GST) represents a modern implementation of these principles, eliminating multiple state-level taxes that previously acted as barriers to inter-state trade.
⚖️ Judicial Interpretation of Part XIII
Scope of "Trade, Commerce and Intercourse"
The Supreme Court has interpreted these terms broadly:
• Trade: Buying and selling of goods for profit
• Commerce: Includes transportation and related activities
• Intercourse: Movement of people across state borders
The freedom applies to both inter-state and intra-state trade, commerce, and intercourse.
"Public Interest" Standard
Courts have established that restrictions under Articles 302 and 304 must:
• Be reasonable and not excessive
• Serve a legitimate public purpose
• Have a rational nexus with the objective
• Not be discriminatory in nature
The burden of proving reasonableness lies with the State imposing the restriction.
Relationship with Article 19(1)(g)
While Article 19(1)(g) guarantees the right to practice any profession, trade, or business, Part XIII specifically addresses the freedom of movement of goods, services, and people across state boundaries.
• Article 19(1)(g): Individual right to trade
• Part XIII: Freedom of trade as an economic principle
Both work together to create a comprehensive framework for economic freedom.
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