Freedom of Trade, Commerce and Intercourse:

Article 301 ensures that the economic unity of India is not broken up by internal barriers. In doing so, the Article imposes a limit on the exercise of legislative power of the Union/State. It also seems that there is some overlapping between Article 301 and Article 19(1)(g) because both aim at freedom of trade and business. If either of the provisions is infringed, the aggrieved individual can seek remedy from the court against the offending legislative or executive action.

If freedom of trade and commerce is restricted directly and immediately by taxes, it would then violate Article 301. In determining whether a tax is valid or offends Article 301, it is the movement of goods that must be looked at. If the tax which is imposed solely on the basis that the goods are transported or carried, it would directly affect the freedom of trade, commerce and intercourse. Trade, commerce and intercourse must pay for the facilities provided by the State by way of constructing, maintaining and regulating roads, bridges and other means of transportation necessary for such trade, commerce and intercourse. So long as there is some correlation between the tax recovered and the cost incurred by the State, the tax cannot be challenged as exproprietary or impeding the freedom of Article 301, though there may be a marginal excess over the cost.

Parliamentary Restrictions:

A law can be made only by Parliament strictly in public intrerest to restrict the Article 301 freedom (Article 302). Measures such as to prevent tax evasion so (as to canalise inter-State trade through registered licensed dealers are considered as restrictions in public interest. Articie 302 is, however, subject to the condition in Article 303 that such Union law should not be discriminatory between different States unless necessary for dealing with a situation of scarcity of goods. It is further stated in Article 302 that it allows the imposition of restrictions in public interest. It does not dea1 with imposition of regulations but fol1ows that the latter can be imposed due to differences between the two. Therefore, it can be noted that the restrictions promote freedom in inter-state transactions whereas regulations promote movement and thus, a restriction may be valid only if it conforms to Article 302 and Article 304, while there is no such requirement for a regulation.

Neither Parliament nor any of the State Legislatures have been given the power or the right by the Constitution to give preference to one state over another in respect of trade and commerce (Article 303). But in case of varied taxation, differential rates of taxation applicable by one state or another, does not tantamount to discrimination. Here discrimination would mean or be applicable when a particular commodity is taxed in one state while exempted in another.

• State Legislatures have certain exclusive powers. These have been provided under Article 304 of the Constitution:
• 1to impose taxes on goods from other States provided similar goods produced within the State are also subjected to the same taxes.
• 2to impose reasonable restrictions on the freedom of trade, commerce or intercourse with another or within that State as may be required in public interest.