Article 301 of the Costitution of India with Case law
Article 301 of the Constitution of India
Title: Freedom of trade, commerce and intercourse
Text of Article 301 (Simplified):
“Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free.”
🔍 Explanation of Key Terms:
| Term | Meaning |
|---|---|
| Trade | Buying, selling, or exchanging goods/services |
| Commerce | Broader than trade — includes transport, communication, insurance, etc. |
| Intercourse | Movement of persons or goods |
✅ Objective of Article 301:
To ensure the economic unity of India by:
Guaranteeing freedom of movement for goods, services, and people across States and Union Territories.
Preventing barriers (like taxes, permits, or discriminatory rules) that may obstruct the free flow of trade and commerce.
🔒 Limitations on Article 301:
Article 301 is not absolute. It is subject to:
Article 302: Parliament can impose restrictions in public interest.
Article 303: No preference or discrimination between States.
Article 304: States can impose reasonable restrictions with conditions.
🧑⚖️ Important Case Laws on Article 301:
1. Atiabari Tea Co. v. State of Assam, AIR 1961 SC 232
Facts: Assam imposed a tax on the transport of tea through the state.
Held:
The tax hampered the movement of goods, violating Article 301.
The Court held that freedom of trade includes freedom of movement, and restrictions by States must conform to Article 304.
Established the "direct and immediate effect" test for judging restrictions on trade.
2. Automobile Transport Ltd. v. State of Rajasthan, AIR 1962 SC 1406
Facts: Rajasthan imposed a tax on motor vehicles used for transporting goods.
Held:
Reasonable regulatory measures (like fees for maintenance of roads) do not violate Article 301.
This case clarified that not all taxes or regulations are restrictions.
Introduced the "compensatory tax" doctrine: if a charge compensates for services (e.g., road use), it's valid.
**3. State of Kerala v. Abdul Kadir, AIR 1976 SC 182
Facts: Kerala imposed a license fee for transporting coir outside the state.
Held:
The license requirement was held invalid as it restricted free trade and wasn't saved under Article 304(b).
Any restriction must be justified as reasonable and in public interest.
4. Jindal Stainless Ltd. v. State of Haryana, (2016) 11 SCC 1 (11-Judge Constitution Bench)
Facts: States imposed entry taxes on goods entering from other States.
Held:
Entry tax is not per se unconstitutional, but it must not violate Article 301.
The tax must be compensatory, i.e., linked to services provided, else it’s invalid.
The decision harmonized fiscal federalism with the concept of a common market.
**5. Indian Cement Ltd. v. State of A.P., AIR 1988 SC 567
Held:
A tax that targets goods exported to other States violates Article 301 unless protected under Article 304(b).
📌 Article 301 & GST:
Post 101st Constitutional Amendment (2016), GST replaced many trade-related taxes. Article 301 still plays a key role in:
Ensuring free flow of goods across States under GST,
Preventing States from introducing new barriers (like separate local taxes),
Upholding the principle of "One Nation, One Market".
🧾 Summary Table:
| Article | Provision |
|---|---|
| 301 | Freedom of trade across India |
| 302 | Parliament can restrict in public interest |
| 303 | No discrimination/preference between States |
| 304 | States may impose restrictions with conditions |
✅ Conclusion:
Article 301 is a cornerstone of India’s economic federalism. It protects the unrestricted movement of trade and commerce across the country and ensures that India functions as a single economic entity.
🔑 Key takeaway: Article 301 ensures that no State or law creates economic isolation, and that barriers to inter-State trade are constitutionally checked.
RELATED Blog
0 comments