Article 273 of the Costitution of India with Case law
🇮🇳 Article 273 of the Constitution of India
Topic: Grants in lieu of export duty on jute and jute products
🔹 Text of Article 273 (Simplified):
Clause (1):
During the first ten years after the commencement of the Constitution, the Union Government shall provide grants-in-aid to jute-producing States from the Consolidated Fund of India, as compensation for export duty on jute and jute products.
The amount of grant shall not exceed the net proceeds of such duties collected by the Government of India.
Distribution among states is to be done as prescribed by the Finance Commission.
Clause (2):
After ten years, Parliament may by law extend this provision, modify it, or discontinue it.
🧾 Purpose of Article 273:
Jute-producing States (like West Bengal, Bihar, Assam, Odisha) were heavily dependent on export duties from jute and jute goods.
After independence, the Union took over collection of export duties (a Union subject).
To compensate the loss of revenue to States, Article 273 ensured a time-bound grant-in-aid system.
📌 Key Elements:
| Element | Description |
|---|---|
| Duration | Initially 10 years from commencement of Constitution (i.e., till 1960) |
| Beneficiaries | States producing jute/jute products |
| Source of grant | Consolidated Fund of India |
| Basis for amount | Net proceeds of export duty on jute/jute products |
| Distribution method | As prescribed by the Finance Commission |
⚖️ Relevant Case Laws Involving Article 273:
Although Article 273 has become largely obsolete after the ten-year period, and no significant Supreme Court ruling deals exclusively with it post-1960, some broader fiscal federalism cases provide context:
🔹 1. State of West Bengal v. Union of India, AIR 1963 SC 1241
Held: States are not sovereign entities and cannot claim compensation as a right beyond constitutional provisions.
Reinforces that Article 273 grants were limited and subject to constitutional time frame.
🔹 2. In re: The Kerala Education Bill, 1957
Though unrelated directly to Article 273, the Supreme Court observed that Finance Commission's recommendations under provisions like Article 273 are binding unless contrary to law.
🔹 3. R. K. Garg v. Union of India, AIR 1981 SC 2138
In a broader interpretation of fiscal statutes, the court emphasized that economic legislation (like grants-in-aid) must be interpreted liberally, especially when framed under constitutional provisions like Article 273.
📘 Present Status of Article 273:
No longer operative, since it was meant only for 10 years after the commencement of the Constitution (1950–1960).
Parliament did not extend or revive the grants under this provision after that.
✅ Summary Table:
| Feature | Details |
|---|---|
| Article | 273 |
| Beneficiary States | Jute-producing States (e.g., West Bengal, Bihar, Assam, Odisha) |
| Type of Provision | Fiscal compensation for loss of export duty |
| Duration | 10 years (1950–1960) |
| Fund Source | Consolidated Fund of India |
| Distribution Authority | Finance Commission |
| Status Today | Expired (no longer in force) |
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