BharatNotes Cross-paper relevance
- GS2 — Core: Part XIII as a limit on both Union and state legislative power; Article 304(b) and the President's previous sanction as a federal check; Article 307 and the authority never constituted; the Sarkaria Commission's reading of Part XIII
- GS3 — Economic dimension: entry tax, octroi and state trade barriers; the internal common market; GST as the political settlement of a problem Part XIII was drafted to solve; supply chain and logistics costs of inter-state checkposts
- Essay — Recurring themes: "One nation, one market"; "Economic unity and political federalism"
Part XIII is the shortest working Part of the Constitution and one of the least read. It runs to seven articles, one of which has been omitted, and it does something no other Part does: it limits both Parliament and the state legislatures at once, on the same subject, for the same reason. The reason is that a federation with internal customs barriers is not an economic union at all.
The framers had a live example in front of them. Before 1947 the princely states levied their own transit duties, and goods crossing India paid repeatedly. Part XIII was written so that the new Union would not inherit that.
Why Part XIII sits apart from the Seventh Schedule
The Seventh Schedule answers the question who may legislate. Part XIII answers a different one: given that you may legislate, how far may you go before you break the common market. A state can have unimpeachable legislative competence under the State List and still fall foul of Article 301.
That is the whole point of the Part, and it is the point most often missed. Article 301 opens with "Subject to the other provisions of this Part", which means the freedom it declares is qualified from the first word by the five articles that follow it.
The seven articles
Article 301 — the freedom itself
Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free.
Three things follow from the wording. The freedom runs throughout the territory of India, so it covers movement inside a single state as well as movement across state lines. It is not phrased as a right of a citizen, so it is not in Part III and cannot be enforced under Article 32 as a fundamental right; it operates as a limitation on legislative power. And "intercourse" is wider than trade, covering movement of persons and goods that is not commercial at all.
Article 302 — Parliament's power to restrict
Parliament may by law impose restrictions on the freedom "as may be required in the public interest".
Note what is absent. Article 19(6) speaks of reasonable restrictions; Article 302 does not use the word. The Sarkaria Commission examined a proposal to insert it and declined, on the ground that a law restricting trade under Article 302 is in any case open to judicial review for want of a reasonable nexus with the public interest claimed, so adding the word would be "merely of theoretical significance" (Sarkaria Commission, Chapter XVIII, paras 18.3.03 to 18.3.05 and 18.5.02).
Article 303 — the bar on preference and discrimination
Article 303(1) bars both Parliament and a state legislature from making any law that gives preference to one state over another, or discriminates between states, by virtue of any trade and commerce entry in any of the three Lists.
Article 303(2) carves out one exception, and it is available only to Parliament: a law may give preference or discriminate if the law itself declares that it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of India. The declaration must be in the law. A state legislature has no equivalent power under Article 303 at all.
Article 304 — the two state exceptions
Article 304 opens with a non-obstante clause overriding both Article 301 and Article 303, and gives a state legislature two distinct powers.
Article 304(a) — the tax exception. A state may tax goods imported from other states or from Union territories, but only a tax "to which similar goods manufactured or produced in that State are subject", and only "so as not to discriminate" between the imported and the locally produced goods. This is an equality test, not a ceiling. A state is free to tax heavily, provided it taxes its own goods the same way.
Article 304(b) — the general restriction power. A state may impose reasonable restrictions on trade with or within that state as required in the public interest. Here the word reasonable does appear.
The proviso is the part that matters for the exam: no Bill or amendment for the purposes of clause (b) may be introduced or moved in a state legislature without the previous sanction of the President. The sanction is required for clause (b) alone, never for clause (a).
The Article 255 cure. A missing previous sanction is not automatically fatal. Article 255 provides that no Act shall be invalid by reason only that a required recommendation or previous sanction was not given, if assent to that Act was afterwards given by the President. In practice a state can obtain the President's assent later and save the law.
The Article 213 link. Article 213(1)(a) bars a Governor from promulgating an ordinance without the President's instructions where a Bill containing the same provisions would have needed the President's previous sanction. So the Article 304(b) requirement reaches the ordinance route as well.
Article 305 — saving of existing laws and state monopolies
As substituted by the Fourth Amendment Act, 1955, Article 305 saves existing laws from Articles 301 and 303 except so far as the President directs otherwise, and protects laws relating to state monopolies of the kind referred to in Article 19(6)(ii) from Article 301.
Article 306 — omitted
Article 306 dealt with the power of certain Part B states to impose trade restrictions. It was omitted by the Seventh Amendment Act, 1956, which is also the amendment that abolished the Part A, B, C and D classification of states. Part XIII therefore has six live articles, not seven.
Article 307 — the authority Parliament has never appointed
Parliament may by law appoint an authority to carry out the purposes of Articles 301 to 304, and confer on it such powers and duties as it thinks necessary.
It never has. The Sarkaria Commission recorded flatly that the provision "has not been resorted to so far" (para 18.2.09), and that remains true as of September 2026.
| Article | What it does | Who it binds |
|---|---|---|
| 301 | Declares trade, commerce and intercourse throughout India free, subject to the rest of Part XIII | Union and states |
| 302 | Lets Parliament restrict the freedom in the public interest. The word "reasonable" is deliberately absent | Parliament |
| 303(1) | Bars any law giving preference to, or discriminating between, states by virtue of a trade and commerce entry | Union and states |
| 303(2) | Exception for scarcity of goods, available to Parliament only, and only if the law itself so declares | Parliament |
| 304(a) | Lets a state tax imported goods, but only on par with its own similar goods. No presidential sanction needed | States |
| 304(b) | Lets a state impose reasonable restrictions in the public interest. Needs the President's previous sanction | States |
| 305 | Saves existing laws and state monopoly laws | Union and states |
| 306 | Omitted by the Seventh Amendment Act, 1956 | — |
| 307 | Lets Parliament appoint an authority for Articles 301 to 304. Never used | Parliament |
Source: text of Part XIII, The Constitution of India, as on 11 November 2025, Legislative Department, Ministry of Law and Justice, read directly.
The judicial story, in three cases
Part XIII is one of the few areas where the Supreme Court reversed itself after fifty-four years, so the sequence matters more than any single holding.
Atiabari Tea Co. Ltd. v. State of Assam
Decided 16 August 1960, reported AIR 1961 SC 232. A five-judge bench: Sinha CJ with Gajendragadkar, Wanchoo, Das Gupta and Shah JJ.
Assam had taxed tea and jute carried by road and inland waterways. The Court held that taxes are not outside Article 301, and laid down the test that a levy offends Article 301 if it directly and immediately restricts the movement of trade. Article 301 does not confer freedom from taxation as such, only freedom from taxation that impedes the free flow of trade.
The case is usually cited by its report year, 1961. The judgment itself is dated 1960.
Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan
Decided 9 April 1962, AIR 1962 SC 1406. A seven-judge bench convened to reconsider Atiabari.
The majority accepted the "direct and immediate" test but grafted an exception onto it. Regulatory measures and compensatory taxes do not offend Article 301, because a levy that merely recovers the cost of a facility the trader uses, a road or a bridge, facilitates trade rather than impeding it.
This created the compensatory tax doctrine, and it governed the field for fifty-four years.
Jindal Stainless Ltd. v. State of Haryana
Decided 11 November 2016, AIR 2016 SC 5617, reported (2017) 12 SCC 1. A nine-judge Constitution Bench, deciding 7 to 2. Thakur CJI with Sikri, Bobde, Shiva Kirti Singh, Ramana, Banumathi and Khanwilkar JJ formed the majority; Chandrachud and Ashok Bhushan JJ dissented.
The bench upheld state entry taxes and, in doing so, took the doctrine apart:
- A non-discriminatory tax does not by itself amount to a restriction on the freedom under Article 301. Taxation is generally outside Article 301 unless it discriminates.
- The compensatory tax theory built in Automobile Transport has no juristic basis and was discarded. The Court found no textual footing in Part XIII for a category the Constitution never mentions.
- The real battleground moves to Article 304(a), which is a test of discrimination between imported and locally produced goods, not a test of whether a levy was "compensatory".
| Before 11 Nov 2016 | After Jindal Stainless | |
|---|---|---|
| Is a tax caught by Article 301? | Yes, if it directly and immediately restricts trade | Generally no. A non-discriminatory tax is not a restriction |
| Escape route for a state | Show the tax was compensatory or regulatory | Show it is non-discriminatory under Article 304(a) |
| Status of "compensatory tax" | A judicially created category | Discarded as having no juristic basis |
| What a challenger now argues | The levy impedes the flow of trade | The levy discriminates against goods from other states |
Source: judgment dates, bench composition and equivalent citations verified against the case records on Indian Kanoon for Jindal Stainless, Atiabari and Automobile Transport.
What is not "trade" at all
In State of Bombay v. R.M.D. Chamarbaugwala, decided 9 April 1957, the Supreme Court held that gambling and prize competitions of a gambling nature are res extra commercium, outside commerce altogether. Activities of that kind therefore attract neither Article 19(1)(g) nor Article 301, and a state may suppress them entirely without needing any Part XIII justification.
The doctrine matters because it decides the threshold question. If an activity is not trade, Part XIII never engages, and the state does not have to defend its law under Article 304 at all.
Article 307 and what the Sarkaria Commission actually recommended
The Sarkaria Commission devoted Chapter XVIII of its report to Part XIII and reached a clear conclusion, but it is frequently misreported. Several study sources say the Commission recommended an "Inter-State Trade and Commerce Commission". The report uses no such name. What it recommends, at paragraphs 18.4.07 and 18.5.05, is that "an expert authority should be constituted under Article 307", enabled to:
- survey and periodically report on the restrictions different governments and their agencies impose on intra-state and inter-state trade;
- recommend measures to rationalise or modify those restrictions;
- examine complaints from the public and from the trade; and
- suggest reforms in the imposition, levying and sharing of taxes for the purposes of Part XIII.
The Commission added that such a body should begin with an advisory role only, acquiring further powers in the light of experience (para 18.4.08).
It also recorded the objection it was answering. The Government of India did not want the authority. The Department of Civil Supplies argued that central ministries could respond to changing situations faster, that an Article 307 body "would only cause delays, conflicts and controversies among the various States/regions", and that it could in any case only be "a data collecting, deliberative and advisory body" while real decisions stayed with the Centre (para 18.4.03).
The Commission rejected a further suggestion that the proposed Inter-Governmental Council under Article 263 could absorb the function, on the ground that what was needed was expert examination rather than consideration at the highest political level (para 18.4.06).
Nothing has been constituted since. As of September 2026, Article 307 remains unused.
Source: Government of India, Report of the Sarkaria Commission on Centre-State Relations, Chapter XVIII, "Trade, Commerce and Intercourse within the Territory of India", read directly from the chapter PDF published by the Inter-State Council Secretariat. Paragraph numbers as cited above.
GST and Part XIII
GST answered politically what Part XIII could only answer judicially. Entry tax, octroi and the check-post economy that generated most Part XIII litigation were subsumed into GST from 1 July 2017, which is why the flow of Article 301 cases has thinned since.
Part XIII has not been repealed and has not become academic. Two links keep it live:
- Article 279A, the GST Council, was written into the proviso to Article 368(2) by the 101st Amendment Act, 2016, so its structure now enjoys the same entrenchment as the provisions Part XIII protects. See Amendments, Schedules & Special Provisions.
- Taxes outside GST remain squarely inside Part XIII. State excise on alcohol for human consumption, stamp duty, electricity duty, taxes on petroleum products and vehicle taxes are all still state levies, and each is testable against Article 304(a).
Confusion pairs
| Often confused | The distinction |
|---|---|
| Article 302 vs Article 304(b) | Article 302 is Parliament's power and does not say "reasonable". Article 304(b) is a state's power, does say "reasonable", and needs the President's previous sanction |
| Article 304(a) vs Article 304(b) | (a) is about taxes and needs no presidential sanction. (b) is about restrictions generally and needs previous sanction. Nearly every trap here turns on attaching the sanction to the wrong clause |
| Article 303(2) exception | Available to Parliament only, only for scarcity of goods, and only if the law itself declares it. Not available to a state at any time |
| Article 301 vs Article 19(1)(g) | Article 19(1)(g) is a fundamental right of citizens, enforceable under Article 32. Article 301 is a limitation on legislative power and is not in Part III |
| Previous sanction vs subsequent assent | Article 304(b) demands sanction before introduction. Article 255 lets later presidential assent cure its absence |
| Atiabari vs Automobile Transport | Atiabari (5 judges, 1960) created the "direct and immediate" test. Automobile Transport (7 judges, 1962) added the compensatory tax exception to it |
| Article 306 vs Article 307 | 306 is omitted. 307 is live but has never been used |
Prelims quick-fire facts
- Part XIII runs from Article 301 to Article 307, of which Article 306 stands omitted (Seventh Amendment Act, 1956).
- Article 305 was substituted by the Fourth Amendment Act, 1955.
- The words "or the Union territories" in Article 304(a) were inserted by the Seventh Amendment Act, 1956.
- Article 301 covers intra-state movement too, not only inter-state.
- Article 302 does not contain the word "reasonable". Article 304(b) does.
- The President's previous sanction attaches to Article 304(b) only.
- Jindal Stainless (2016) was decided by nine judges, 7 to 2, on 11 November 2016.
- Parliament has never appointed an authority under Article 307.
Exam strategy
For Prelims, the yield is concentrated in three places: which clause needs the President's sanction, that Article 306 is omitted, and that Article 303(2) belongs to Parliament alone. Learn Article 304 as two separate powers rather than one article and the traps stop working.
For Mains, Part XIII is a federalism answer, not a tax answer. The framing that earns marks is the tension the Part is built on: economic unity requires a single market, and federalism requires that states retain fiscal room. Article 304 is where the Constitution splits the difference, and Jindal Stainless is the moment the Court decided that the split should be policed through non-discrimination rather than through a judicially invented category. The Sarkaria Commission's unimplemented Article 307 recommendation, and the Centre's stated reasons for resisting it, give the answer a concrete institutional gap to point at.
Sources
- The Constitution of India, as on 11 November 2025, Legislative Department, Ministry of Law and Justice. Text of Articles 255, 301 to 307 and 368 read directly from the published volume. legislative.gov.in
- Report of the Sarkaria Commission on Centre-State Relations, Chapter XVIII, published by the Inter-State Council Secretariat. interstatecouncil.gov.in
- Jindal Stainless Ltd. v. State of Haryana, AIR 2016 SC 5617, (2017) 12 SCC 1, decided 11 November 2016. Case record
- Atiabari Tea Co. Ltd. v. State of Assam, AIR 1961 SC 232, decided 16 August 1960. Case record
- Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan, AIR 1962 SC 1406, decided 9 April 1962. Case record
- State of Bombay v. R.M.D. Chamarbaugwala, decided 9 April 1957.
A correction to a common claim. Several widely used study sources state that the Sarkaria Commission recommended a body named the "Inter-State Trade and Commerce Commission". The Commission's own text, checked at Chapter XVIII paragraphs 18.4.07 and 18.5.05, recommends "an expert authority" under Article 307 and gives it no such name. The functions listed on this page are the Commission's own words.
