Article 301 of Indian Constitution: Freedom of trade commerce and intercourse

Article 301 of Indian Constitution ensures that trade, commerce, and intercourse across India remain free. Article 301 aims to establish a unified national market. However, this freedom is not absolute and is governed by other provisions in Part XIII. It prevents states from imposing discriminatory barriers against goods, services or people from other regions. Article 301 Constitution of India focuses on interstate trade freedom whereas Article 19(1)(g) guarantees citizens the right to practice any profession, subject to reasonable restrictions under Article 19(6). Article 302 to 307 of Indian Constitution further regulates freedom of trade by empowering Parliament and state legislatures to impose restrictions in public interest. Article 304 of Indian Constitution specifically permits states to enact reasonable limits on trade within their territories, provided these do not contradict central laws. Explore in-depth analysis of other Constitutional Articles.

Article 301 of Indian Constitution

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.

Note: “The information on Article 301 of Indian Constitution provided above has been sourced from the official website, i.e., Indian Code. While the content has been presented here for reference, no modifications have been made to the original laws and orders.”

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Article 301 of Indian Constitution guarantees the constitutional Freedom of trade commerce and intercourse across India. It ensures that economic activities are not hindered by internal trade barriers and foster smooth movement of goods and people. However, this freedom is not absolute and must be read in conjunction with Article 302 to Article 307 of Indian Constitution which outlines permissible restrictions by Parliament or state legislatures in certain circumstances.

Freedom of trade commerce and intercourse

The terms Freedom of trade commerce and intercourse under Article 301 of Indian Constitution are fundamental in understanding the legal provisions related to economic activities. They define the scope of economic freedom under Article 301 of the Constitution. The following is a difference between trade and commerce and intercourse terms:

Article 301 of Indian Constitution Objective

Article 301 of Indian Constitution seeks to facilitate the free flow of trade and commerce across the entire nation by elimination of inter-state barriers. The main purpose of Article 301 of Constitution is to foster national economic unity and integration.

• Elimination of trade barriers between states.
• Promotion of unified trade practices across the country.
• Creation and maintenance of a seamless national economic system.

The doctrine of Res Extra Commercium under Article 301 of Indian Constitution restricts the scope of what qualifies as lawful trade and commerce. Activities that exploit others or are deemed unethical are excluded from constitutional protection under this doctrine.

• In Fateh Chand v. State of Maharashtra (1977) the Supreme Court held that money lending, although a form of trade, can be excluded from protection if carried out unethically.
• The Court highlighted that exploitative activities violating the Directive Principles of State Policy cannot claim protection under Article 301 of Constitution.
• However, state actions aimed at protecting weaker sections or improving their living standards may still qualify as legitimate trade or business.

Article 301 of Indian Constitution Scope

Article 301 of the Indian Constitution ensures the freedom of trade, commerce, and intercourse across India, both between states and within individual states. This provision is inspired by Section 92 of the Australian Constitution and serves as a foundational element for India's economic unity.

• Article 301 of Constitution guarantees the Freedom of trade commerce and intercourse throughout the Indian territory applicable to both inter-State and intra-State activities.
• Article 301 also imposes restrictions on the legislative powers of the Union and State governments and ensures that any laws that hinders economic freedom are limited.

Direct and Immediate Restrictions

Article 301 of Indian Constitution safeguards the free flow of goods and services across the country. Any law that directly and immediately obstructs or hampers this freedom is considered as an infringement of Article 301, with certain exceptions, such as in the case of taxation laws.

• Laws that impede the immediate movement of goods or services are considered a violation of Article 301 of Constitution.
• Taxation laws, if they act as barriers to movement, may also violate this freedom, unless they fall under specific exceptions.

Regulatory Measures and Compensatory Taxes

Regulatory laws or those imposing compensatory taxes to support infrastructure and facilitate trade are not considered violations of Article 301 of Indian Constitution.

• These laws are deemed permissible as they do not directly impede the free movement of goods or services.
• For example, a law that imposes a tax per vehicle for road use is valid, as it contributes to the maintenance of public infrastructure, even if it has an indirect effect on movement.

Reasonable Restrictions under the Constitution

Article 301 of Indian Constitution guarantees the Freedom of trade commerce and intercourse, there are certain provisions under the Constitution that allow for reasonable restrictions in certain circumstances.

• Article 302 of Indian Constitution: According to Article 302, the Parliament has the authority to impose restrictions on trade and commerce in the public interest.
• Article 303 of Indian Constitution: As per Article 303 temporary restrictions may be imposed on inter-State trade to address situations like scarcity of goods.
• Article 304 of Indian Constitution: States can regulate internal trade and impose taxes but they must ensure no discrimination against goods from other States and obtain Presidential assent when necessary under Article 304.
• Article 305 of Indian Constitution: Laws existing before the enactment of the Constitution are protected and cannot be challenged under Article 301 of Indian Constitution.

Article 301 of Indian Constitution & Activities not Considered Trade

There are certain transactions that may seem similar to trade but they are not regarded as lawful trade under Article 301 of Indian Constitution. These activities often involve criminal or undesirable actions. The Supreme Court in State of Bombay v. R.M.D. Chamarbaugwala (1957) explained that illegal activities such as gambling, lotteries and other criminal acts are excluded from the protection of Article 301 of Constitution.

Examples of such activities include:

• Engaging in illegal activities for profit such as creating obscene content for money.
• Human trafficking including the trafficking of women and children.
• Criminal operations like planning terrorist activities.

Despite potentially using similar methods or transactions as trade these activities fall outside the scope of ‘lawful trade’ and are not protected by Article 301 of Indian Constitution.

Article 19 (1)(g) and Article 301 of Indian Constitution Comparative Analysis

Article 19(1)(g) and Article 301 of Indian Constitution deal with economic freedoms but they differ in scope, applicability and constitutional context. The following table outlines the key distinctions between the two:

Aspect	Article 301	Article 19(1)(g)
Enshrined in Constitution	Part XIII	Part III
Nature of Right	Constitutional right	Fundamental right
Who Can Claim	Citizens and non-citizens	Only citizens
Subject Matter	Free flow of trade, commerce and intercourse across India	Right to practice any profession or to carry on any trade, occupation or business
Restrictions	Subject to Articles 302–307 (e.g., public interest, Parliament's powers)	Subject to Article 19(6) (reasonable restrictions in public interest)
Scope	Deals with trade and commerce in general	Focuses on individual rights related to profession or trade
During Emergency	Not suspended	Can be suspended under Article 358 or Article 359
Relation	Acts as a broader economic guarantee supporting free trade	Protects the individual's freedom in trade and profession
Judicial Approach in Emergency	Courts may refer to Article 301 of Indian Constitution when Article 19(1)(g) is suspended	Not enforceable during an emergency.

Article 301 of Indian Constitution Significance

The significance of Article 301 of Indian Constitution under Part 13 lies in its role in bolstering the economic unity of the country. By ensuring the freedom of trade and commerce across state boundaries, it facilitates smooth economic activities and supports cooperative federalism.

• National Economic Integration: Article 301 of Constitution is important for the creation of a common market within India. It is essential for balanced economic growth and operations of a federal economy.
• Removal of Trade Barriers: It aims to eliminate any artificial or discriminatory restrictions imposed by individual states that could fragment the national economy.
• Constitutional Safeguard: Article 301 of Indian Constitution provides a legal shield against arbitrary state actions that could hamper the freedom of internal trade.

Article 301 of Indian Constitution Case Law

The scope and application of Article 301 of Indian Constitution have been explained through several Landmark Judgements. The Courts have interpreted the terms trade, commerce and intercourse broadly and also laid down clear limitations, especially regarding unlawful or restrictive activities. The following are some of the key judgments that have shaped the understanding of Article 301 of Constitution.

Welton v. State of Missouri (1875) 91 US 275

Justice Field interpreted the term commerce broadly and stated that it covers all types of trade-related interactions including the transportation, purchase, sale and exchange of commodities between citizens of different states.

Atiabari Tea Co. Ltd. v. State of Assam AIR 1961 SC 232

The Petitioner in Atiabari Tea Co. Ltd. v. State of Assam engaged in the tea business, transported tea from Assam to Calcutta. Under the Assam Taxation Act, 1954, a tax was levied on goods transported by road or inland waterways within Assam. The Supreme Court ruled that this tax directly hindered the movement of goods and, therefore, violated Article 301 of Indian Constitution. Consequently, the law was declared void and unenforceable.

The judgment established that tax laws are not outside the scope of Article 301 of Constitution if they impose a direct restriction on the free movement of goods.

Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan AIR 1962 SC 1406

The Supreme Court laid down the following key principles in Automobile Transport Case:

• Article 301 of Indian Constitution guarantees Freedom of trade commerce and intercourse both inter-State and intra-State.

• This freedom extends to movement of goods and persons.

• All laws, including taxation laws, must conform to Article 301 of Constitution if they affect trade.

• Only those laws which directly and immediately obstruct the free flow of trade will fall foul of Article 301.

• Laws that are regulatory or impose compensatory taxes to facilitate trade are permissible.

State of Bombay v. R.M.D. Chamarbaugwala AIR 1957 SC 699

The Supreme Court held that gambling, including advertisements promoting such activities outside the state of Bombay, does not fall under the scope of the fundamental right to trade and commerce as guaranteed by Article 19(1)(g) and Article 301 of Indian Constitution.

B.R. Enterprises v. State of Uttar Pradesh AIR 1999 SC 1867

The Court held that lotteries, even if conducted by the State, are still forms of gambling. Hence, they do not qualify as trade or commerce under Article 301 of Indian Constitution or Article 303 and are thus outside constitutional protection. 

Conclusion

Article 301 of Indian Constitution ensures the free flow of trade, commerce, and intercourse across India, promoting national economic unity. While not absolute, this freedom is subject to reasonable restrictions under Articles 302–307. Courts have upheld that only direct restrictions violate Article 301, and regulatory or compensatory measures are allowed.