Under the mandatory Proviso to Article 304(b) of the Constitution of India, a Bill imposing reasonable restrictions on freedom of trade, commerce, or intercourse within a State:

SHALL NOT be introduced or moved in the Legislature of a State without the PREVIOUS SANCTION of the President (unless cured under Article 255 by subsequent Presidential assent)

Can be introduced freely without any presidential involvement

Requires prior permission of the Chief Justice of High Court

Can be passed only by a three-fourths majority

Article 301 of the Constitution of India provides that, subject to the other provisions of Part XIII, trade, commerce, and intercourse throughout the territory of India shall be:

Free (guaranteeing inter-State and intra-State economic unity without geographic trade barriers)

Subject to unrestricted State toll taxes

Restricted exclusively to public sector undertakings

Free only for international trade

Under Article 302 of the Constitution of India, who is empowered to impose restrictions on the freedom of trade, commerce, or intercourse between one State and another as may be required in the public interest?

The President by executive decree

In Nazeria Motor Service v. State of Andhra Pradesh (1969) 2 SCC 576, the Supreme Court ruled on Article 304(b), holding that:

Even if a State Bill restricting trade has received the previous sanction or subsequent assent of the President, the Courts can independently examine whether the restriction is 'reasonable' and 'in the public interest'

Presidential assent completely ousts judicial review under Article 304(b)

Courts cannot examine taxation laws under Part XIII

Motor vehicle taxes are entirely immune from constitutional challenges

In Akadasi Padhan v. State of Orissa (AIR 1963 SC 1047), the Supreme Court ruled regarding State Monopolies created under Article 19(6)(ii) and Article 305 that:

A State Monopoly excluding private citizens from any trade or business MUST BE CREATED BY A VALID STATUTE/LAW enacted by the competent Legislature, and CANNOT be established merely by an executive or administrative order

State monopoly can be created by simple executive notification

State monopolies violate Article 301 under all circumstances

Only the Central Government can create monopolies

Under the Proviso to Article 304(b) of the Constitution of India, a Bill seeking to impose reasonable restrictions on the freedom of trade, commerce, or intercourse within a State in public interest:

Shall NOT be introduced or moved in the Legislature of a State WITHOUT THE PREVIOUS SANCTION OF THE PRESIDENT (though subsequent presidential assent can cure the defect under Article 255)

Requires prior permission of the Chief Justice of High Court

Can be passed freely without any presidential involvement

In the landmark 7-Judge Bench rulings in Atiabari Tea Co. Ltd. (AIR 1961 SC 232) and Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan (AIR 1962 SC 1406), the Supreme Court interpreted Article 301 (Freedom of Trade, Commerce, and Intercourse) by holding that:

Article 301 guarantees freedom from direct and immediate restrictions on inter-state movement of goods, but REGULATORY MEASURES and COMPENSATORY TAXES (e.g. motor vehicle road taxes used for maintaining highways) do not impede the freedom of trade and are constitutionally valid

All state taxes on transport are unconstitutional violations of Article 301

Article 301 applies only to foreign maritime trade

States cannot levy any taxes on goods manufactured outside their territory

📖 Constitution of India•🎯 7 Practice MCQs

Part XIII: Trade, Commerce & Intercourse within India (Articles 301–307)

Chapter-wise objective questions with statutory bare act articles, landmark Supreme Court case laws, and past judicial service citations.

Very Importantarticle-304-b-provisoprevious-sanction-of-presidentarticle-255-curefreedom-of-trade-restrictionsMP HJS 2008DU LLM 2022BJS 2009DAPP 2008Importantarticle-301trade-commerce-intercourse-free

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Part XIII: Trade, Commerce & Intercourse within India (Articles 301–307) • 7 Questions

📚 Chapter Practice Coverage

This practice module for Part XIII: Trade, Commerce & Intercourse within India (Articles 301–307) contains 7 Multiple Choice Questions tailored for State Judicial Service Preliminary Examinations (including UP PCS-J, Delhi Judicial Service, Bihar Judiciary, MP Judiciary, Rajasthan Judicial Service), CLAT LL.M, All India Bar Examination (AIBE), and UGC-NET Law.

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