Judicial review of provisions of freedom of trade and commerce

Last Updated on November 1, 2022 by NewsDesk SLC

The provisions for trade, commerce and intercourse are enshrined in part XIII of the Indian Constitution, ranging from article 301 to 307. These articles are composed of provisions providing freedom of trade and commerce while some provide restrictions and other necessary rules and regulations related to trade. Article 301 says the trade, commerce and intercourse should be free inside the territories of India. This provision serves more than just one purpose. It most promotes trade and business relations amongst states in India but it also serves by emboldening relationships of the states. But there are some controversies related to this provision.

The provision provides for free trade, commerce and intercourse amongst Indian states, but the word ‘free’ here does not mean free in the same context as used in normal senses. It is important to note that the main intention of the provision is to lower the restrictions in inter-state trades. But not all restrictions are the same. Some restrictions are necessary in order maintain order and regulations.

The provision has often been the centre topic of various debates, the main point of discussion being that the provision does not fulfill its duty of providing freedom of trade, and instead the interpretation of the provision rather makes it difficult and restricts freedom of trade and commerce in the country.

Judicial review is a very important of a democracy and especially in the working of developed country. Judicial interpretation of the provision is very important as the original text of the bare provision does not do justice to it. Judicial reviews help control the powers of the executives and legislative when they leave the boundaries they are supposed to stay in. The Supreme Court of India observed in Atiabari Tea Co. vs State of Assam that the main intention of the provision in Article 301 is to promote smooth transfer and movement of the goods to be traded.

The Court also observed in this very case that the freedom promised in the section refers to freedom from restrictions that may restrict flow of goods or may halt trade in any way, and that any law that introduces any taxes on trade shall not be covered under the ambit of the provision. Similarly there have been other judgments related to provisions of trade and commerce in India. The importance of these judgments is that they help give a particular shape to a law which seems ambiguous at first.

Another leading judgment is one from 2016, where the Supreme Court bench composing of 9 judges affirmed in a 7:2 majority judgment that entry taxes levied by states are not ultra virus Article 301. The court in the decision held that the word ‘free’ in the provision does not mean freedom for taxation, and that only those taxes would be held outside the ambit of it which is prohibited under Article 304. This decision of the Supreme Court in Jindal Stainless Steel Ltd. vs. Union of India comes at an important time and holds immense value. H. Anraj vs. Govt. of Tamil Nadu is relevant where the Court goes against the approach of Chamarbaugwala case and held that the dealers in lottery tickets were considered as traders and the activity of selling lottery ticket could get protection of Article 301 and Article 304(a). Besides, one must also appreciate the fact that it is highly impractical to say that Article 301 cannot be said to be violated until and unless the total volume of the trade and commerce is affected.

In this way in all alliance an endeavor is made through constitutional arrangements to make and safeguard a national economic texture to eliminate and forestall neighborhood hindrances to economic action, to eliminate the obstructions in the method of between state exchange and trade and accordingly to make the nation as one single economic assets of the relative multitude of different units might be used to the normal benefit of all. As such, appropriate guidelines of the exchange advance fairness and solidarity among the areas.

Written By – Anshal