The Automobile Transport (Rajasthan) Ltd. Vs. The State of Rajasthan & Ors [1962] INSC 128 (9 April 1962)
09/04/1962 MUDHOLKAR, J.R.
MUDHOLKAR, J.R.
DAS, S.K.
SINHA, BHUVNESHWAR P.(CJ) KAPUR, J.L.
SARKAR, A.K.
SUBBARAO, K.
HIDAYATULLAH, M.
AYYANGAR, N. RAJAGOPALA
CITATION: 1962 AIR 1406 1963 SCR (1) 491
CITATOR INFO :
R 1963 SC 928 (8,9) F 1963 SC1207 (34) R 1963 SC1667 (14,21) R 1964 SC 925 (2,9,12,13,14,57) R 1964 SC1006 (9) R 1967 SC1189 (5,7) F 1967 SC1575 (12) RF 1967 SC1643 (96) E 1968 SC 599 (14) RF 1969 SC 147 (8,9,26,33) E 1970 SC1864 (5) RF 1970 SC1912 (7) RF 1972 SC1061 (52) RF 1972 SC1804 (11) RF 1973 SC1461 (887,1229) RF 1974 SC1389 (173) RF 1974 SC1505 (7) RF 1975 SC 17 (15) R 1975 SC 583 (13,19,25,27) E 1975 SC 594 (4) RF 1975 SC1443 (19,21) RF 1977 SC1825 (18) E&R 1978 SC 68 (252,253,254) RF 1979 SC1459 (33) RF 1981 SC 463 (24,25,26) RF 1981 SC 711 (11) R 1981 SC 774 (9,10,11) RF 1982 SC 29 (2) R 1983 SC 634 (12,14,15) OPN 1983 SC1005 (7) F 1983 SC1283 (5) D 1987 SC 56 (1) F 1987 SC1911 (6,7) RF 1988 SC 567 (11) RF 1988 SC2038 (4) RF 1989 SC1119 (14) R 1989 SC2015 (8) RF 1990 SC 781 (74) C 1990 SC 820 (12,20) RF 1991 SC1650 (3)
ACT:
Freedom of Trade-State carriages-Tax on Vehicles--State law imposing tax on vehicles used in public place or kept for use--Constitutional validity-Rajasthan Motor Vehicles Taxation Act, 1951 (Rajasthan 11 of 1951),ss. 4, 11, Schedules--Constitution of India, Arts. 19, 245, 301, 304 Seventh Sch. List, I, entry 42, List II, entry 57.
HEADNOTE:
Sub-section (1) of s. 4 of the Rajasthan 'Motor Vehicles Taxation Act, 1951, provided : "...... No motor vehicle shall be used in any public place or kept for use in Rajasthan unless the owner thereof has paid in respect of it, a tax at the appropriate rate specified in the schedule 5 to this Act within the time allowed......." The appellants were carrying on the business of plying stage carriages in the State of Ajmer. They held permits and plied their buses on diverse routes. There was one route which lay mainly in Ajmer State but it crossed narrow strips of the territory of the State of Rajasthan. Another route, Ajmer to Kishangarh, was substantially in the Ajmer State, but a third of it was in Rajasthan. Formerly, there was an agreement between the Ajmer State and the former State of Kishangarh, by which neither State charged any tax or fees on vehicles registered in Ajmer or Kishangarh. Later, Kishangarh became a part of Rajasthan. On the passing of the Rajasthan Motor Vehicles Taxation Act, 1951, and the promulgation of the rules made there under, the Motor Vehicles Taxation Officer Jaipur, demanded of the appellants payment of the tax due on their motor Vehicles for the period April 1, 1951, to March 31, 1954. By virtue of the provisions of s. 4 of the Act read with the Schedules no one could use or keep a motor vehicle in Rajasthan without paying the appropriate tax for it and if he did so he was made liable to the penalties imposed under s. II of the Act.
The appellants challenged the legality of the demand on the grounds that s. 4 of the Act read with the Schedules constituted a direct and immediate 492 restriction on the movement of trade and commerce with and within Rajasthan inasmuch as motor vehicles which carried passengers and goods within or through Rajasthan had to pay the tax which imposed a pecuniary burden on a commercial activity and was, therefore, hit by Art. 301 of the Constitution of India and was not saved by Art. 304(b) inasmuch as the proviso to Art. 304(b) was not complied with, nor was the Act assented to by 'the President within the meaning of Art. 255 of the Constitution. The respondents claimed that taxation for the purpose of raising revenue or for the maintenance of roads etc., was not hit by Art. 301 and that the Act did not constitute an immediate or direct impediment to the movement of trade and commerce inasmuch as the tax imposed was a consolidate tax on the vehicle itself though the quantum of the tax was fixed in some instances with reference to the seating capacity or loading capacity etc.
Held (per S. K. Das, Kapur, Sarkar and Subba Rao, jj.), that the Rajasthan Motor Vehicles Taxation Act 195 1, did not violate the provisions of Art. 301 of the Constitution of India and that the taxes imposed under the Act were compensatory or regulatory taxes which did not hinder the freedom of trade, commerce and intercourse assured by that Article. Such taxes, therefore, were legal.
Per S. K. Das, Kapur and Sarkar, JJ--(1) The concept of freedom of trade, commerce and intercourse postulated by Art. 301 must be understood in the context of an ordinary society and as part of a Constitution which envisaged a distribution of powers between the States and the Union, and if so understood, the concept must recognised the need and legitimacy of some degree of regulatory control, whether by the Union or the States. Regulatory measures or measures imposing compensatory taxes for the use of trading facilities did not hamper trade, commerce and intercourse but rather facilitated them and, therefore, were not hit by the freedom declared by Art. 301 ; such measures need out comply with the requirements of the provisions of Art. 304(b) of the Constitution. (2) In view of the provision,.;
of Art. 245, the restrictions in Part XIIT of the Constitution applied to taxation laws ; and such laws were not confined only to legislation with respect to entries relating to trade and commerce in any of the lists in the Seventh Schedule. (3) On a proper construction of the Act and the Schedules, the taxes imposed were really taxes for the use of the roads in Rajasthan. In basing the taxes on passenger capacity or loading capacity, the legislature had merely evolved a method and measure of compensation demanded by the State, but the taxes were still compensation and charge for regulation.
493 Per Subba Rao, J.--(1) The freedom declared under Art. 301 of the Constitution of India referred to the right of free movement of trade without any obstructions by way of barriers, inter-State or intra-State, or other impediments operating as such barriers ; and the said freedom was. not impeded, but on the other hand, promoted, by regulations creating conditions for the free movement of trade, such as, police regulations, provisions for services, maintenance of roads, provision for aerodromes, wharfs etc., with or without compensation. (2) Parliament may by law impose restrictions on such freedom in the public interest, and the States also, in exercise of its legislative power, may impose similar restrictions, subject to the proviso mentioned therein. (3) Laws of taxation were not outside the freedom enshrined either in Art. 19 or Art. 301.
Per Hidayatullah, Rajagopala Ayyangar and Mudholkar, JJ.--(1) Section 4(1) of the Rajasthan Motor Vehicles Taxation Act, 1951, as read with Schs. 11, III and Part I of Sch. IV, offended Art. 301 of the Constitution, and as resort to the procedure prescribed by Art. 304(b) was not taken it was ultra vires the Constitution. (2) The pith and substance of the Act was the levy of tax on motor vehicles in Rajasthan or their use in that State irrespective of where the vehicles came from and not legislation in respect of interState trade or commerce. The Act was within entry 57 of the List of the Seventh Schedule and not under entry 42 of Union List. (3) A tax which is made the condition precedent of the right to enter upon and carry on business is a restriction on the right to carry on trade and commerce within Art. 301. In the present case, the trade, which consisted in making use of motor vehicles for carriage of passengers and goods, could be carried on only if the tax was paid, and, therefore, the taxes imposed by Schs. 11, III and IV(1) operated on trade and commerce directly. (4) The tax levied under the Act was not, truly a fair recompense for wear and tear of roads, but a restriction, which Art, 301 forbade. (5) The Act was not, in its true character, regulatory because there was no provision therein, which could be regarded as regulatory of motor vehicles. The Act plainly levied a tax upon possession or use of motor vehicles.
Atiabari Tea Co., Ltd. v. The State of Assam and Others [1961] 1. S.C.R. 809, discussed.
American and Australian decisions with regard to the Commerce Clause or the American Constitution and s. 92 of the Australian Constitution, considered.
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 42 to 44 of 1959.
Appeals from the final judgment and order dated August 9, 1957, of the Rajasthan High Court (Jaipur Bench) at Jaipur in Civil Writ Petitions Nos. 400 to 402 of 1954.
G. S. Pathak, J. B. Dadachanji, S. N. Andley, Rameshwar Nath and P. L. Vohra, for the appellants.
G. C. Kasliwal, Advocate-General for the State of Rajasthan, A. V. Viswanatha Sastri, S. K. Kapur and P. D. Menon, for the. respondents.
H. M. Seervai, Advocate-General for the State of Maharashtra and Naunit Lal, for the State of Assam' (Intervener).
V. K. T. Chari, Advocate-General for the State of Madras, R. Ganapathy Iyer, T. M. Sen and P. D. Menon, for the State of Madras (Intervener) S. N. Sikri, Advocate-General for the State of Punjab, N.
S. Bindra, T. M. Sen and P. D. Menon, for the State of Punjab (Intervener).
H. M. Seervai". Advorate-General for the State of Maharashtra, T. M. Sen and P. D. Menon, for the State of Maharashtra (Intervener).
K. Bhimsankaram, T. M. Sen and P. D. Menon, for the State of Andhra Pradesh (Intervener).
B. Sen, S. C. Bose and P. K. Bose, for the State of West Bengal (Intervener).
Lal Narain Sinha, Lakshman, Saran, Singh, D. P. Singh, R. K. Garg, M. K. Ramamurthi and S. C. Aggarwal, for the State of Bihar (Intervener).
Dinbandhu Sahu, Advocate-General for the State of Orissa, B. K.P. Sinha, T. M. Sen and P. D. Menon, for the State of Orissa (Intervener).
495 K. L. Hathi and P. D. Menon, for the State of Gujarat (Intervener).
M. Adhikari, Advocate-General for the State of Madhya Pradesh, B. Sen, B. K. B. Naidu, and I. N. Shroff, for the State of Madhya Pradesh (Intervener).
Ranadeb Chaudhuri, S. N. Andley, Rameshwar Nath and P. L. Vohra, for M. A.Tulloch and Co. (Intervener).
K. Srinivasmurty and D. Goburdhun, for Nazeeria Motor Service, Motor, and Andhra Pradesh Motor Union (Interveners).
N. C. Chatterjee, S. C. Mazumdar and R. H. Dhebar, for the Attorney-General for India (Intervener).
1962. April 9. The following judgments were delivered. The judgment of S. K. Das, J. L. Kapur and A. K. Sarkar, JJ., was delivered by S. K. Das, J. The judgment of M. Hidayatullah, N. Rajagopala Ayyangar and J. R. Mudholkar, JJ., was delivered by M. Hidayatullah, J. S. K. DAS, J.-These are three consolidated appeals which arise from the judgment and order of a Division Bench of Rajasthan High Court dated August, 9, 1957. They have been preferred to this Court on the strength of a certificate granted by the said High Court under Art. 132 of the Constitution certifying that the cases involve a substantial question of law as to the interpretation of Art. 301 and other connected articles relating to trade, commerce and intercourse within the territory of India, contained in Part XIII of the Constitution. These appeals were originally heard by a Bench of five Judges and on April 4, 1961, that Bench recorded an order to the effect that having regard to the importance of the constitutional issues involved 496 and the views expressed in the decision of this Court in Atiabari Tea Co. Ltd. v. The State of Assam (1) the appeals should be heard by a larger Bench. The appeals were then placed before the learned Chief Justice for necessary orders, and on his orders have now come to this Bench of seven Judges for disposal. As the constitutional issues involved affect the state of the Union, notices were issued to the Advocates-General concerned. A notice was also issued to the Attorney General on behalf of the Union of India. The States of Andhra Pradesh, Assam, Bihar Gujrat, Madras, Maharashtra, Orissa, Punjab, Uttar Pradesh and West Bengal intervened and were represented before us either through their respective Advocates-General or other Counsel M/s. M. A. Tulloch & Co., Andhra Pradesh Motor Congress and Nazeeria Motor Service, Nellore, applied for intervention on the ground that they would be affected in a pending litigation by the decision of this Court on the constitutional issues involved. Those applications were allowed by us. The result has been that we have heard very full arguments not only from Counsel appear for the appellants and the respondents, but also from the learned Counsel appearing on behalf of the Union of India, the learned Advocates General or Counsel appearing for the intervening States and also from learned Counsel appearing on behalf of the three interveners referred to above.
The appellants in the there appeals are (1) the Automobile Transport (Raj.) Ltd., Ajmer in Civil Appeal No. 42 of 1959.
(2) the Rajasthan Roadways Ltd., Ajmer in Civil Appeal No. 43 of 1959, and (3) Framji C. Framji and others in Civil Appeal No. 44 of 1959. The respondents are (1) the State of Rajasthan, (2) the Regional Transport Officer who is exofficio Motor Vehicles Taxation Officer, Jaipur, and (1) [1961] 1. S. C. R. 809.
497 (3) the Collector of Jaipur. The first two Appellants are private, limited liability companies registered under the Indian Companies Act, 1913 and having their registered offices at Ajmer. The third appellant is a partnership firm named Framji Motor Transport registered under the India Partnership Act. These three appellants carried on the business of plying stage carriages. The first appellant bad nine transport vehicles plying between two stations in the State of Ajmer and between Ajmer and Kishangarh, a town in Rajasthan at the relevant period. The two stations in Ajmer were Nasirabad and Deoli. The road from Nasirabad to Deoli was mainly in the former State of Ajmer but for some distance it passed through certain narrow strips of territory of the State of Rajasthan. Similarly, the road from Ajmer to Kishangarh was partly in the former State of Ajmer and partly in the State of Rajasthan, approximately two-thirds of the road lying in Ajmer and one-third in Rajasthan. The second and the third appellant also had some transport vehicles which plied on the Nasirabad-Deoli route or from Kishangarh to Sarwar, a town situated on the Nasirabad-Deoli road in the State of Rajasthan. On the passing of the Rajasthan Motor Vehicles Taxation Act, 1951 (Rajasthan Act XI of 1951) (hereinafter referred to as the Act), and the promulgation of the rules made thereunder, the second respondent demanded of the appellants payment of the tax due on their motor Vehicles for the period beginning on April 1, 195 1, and ending on March 3 1, 1954. The first appellant was called upon to pay Rs. 22,260, the second appellant Rs. 6,540 and the third appellant Rs. 10,260 under r. 23 of the Rajasthan Motor Vehicles Taxation Rules. When the appellants failed to pay the tax demanded from them, the second respondent issued certificates under s. 13 of the Act to the, third respondent for the recovery of the tax due as arrears 498 of land revenue. On receipt of the demand notices the second and the third appellants filed appeals before the Transport Commissioner, Jaipur, under s. 14 of the Act.
These appeals were however, dismissed by an order of the Transport Commissioner dated October 21, 1953. The first appellant did not file any appeal. Thereafter the three appellants filed three separate writ petitions in the Rajasthan High Court in which their main contention was that the relevant provisions of the Act imposing a tax on their motor vehicles were unconstitutional and void as they contravened the freedom of trade, commerce and intercourse throughout the territory of India declared by Art.301 of the Constitution and therefore the demand and attempted collection of such tax were illegal and should be prohibited. The prayers which the appellants made in their respective writ petitions were mainly there-(1) that it be declared that the Rajasthan Motor Vehicles Taxation Act of 1951 and the Rules made there under are invalid and not in accordance with the provisions of the Constitution of India and consequently null and void and inoperative, and (2) that a writ of prohibition or mandamus or any other appropriate writ, direction or order directing the respondents not to realise any tax from the appellants under the provisions of the Rajasthan Motor Vehicles Taxation Act of 1951 be issued.
The three writ petition was heard together by a Division Bench consisting of Bapna and Bhandari, JJ. They dealt with and disposed of certain other objection to the validity of the Act, with which we are no longer concerned; but as to the contravention of Art. 301 of the Constitution, they felt that in view of the complexity of the points involved and the apparent conflict between certain decisions of other High Courts, the question should be referred to a Full Bench. Accordingly, they referred the question whether ss.
4 and 11 of the Act infringed 499 the right of freedom of trade, commerce or intercourse granted under Art. 301 of the Constitution. The Full Bench dealt with the question from two different stand points.
Firstly, they considered the validity of the Act from the stand point of Act, 19 St (1) of the Constitution which guarantees, to all citizens of India the right to move freely throughout the territory of India; this the Full Bench dealt with under the heading of' freedom of intercourse from the stand point of the individual citizen and came to the conclusion that restrictions which the Act imposed on the individual citizen were reasonable restrictions having regard to the necessity of raising funds for the maintenance of roads and the making of new roads in the State of Rajasthan. Then the High Court considered the validity of the relevant provisions of the Act from the stand point of trade, commerce and came to the conclusion that the regulation of trade, commerce and intercourse within the territory of India, both inter-State and intra-State. was not incompatible with its freedom and in the matter of such regulation of trade, commerce and intercourse a distinction must be drawn between restrictions which are direct and immediate and restrictions which are indirect and consequential. The High Court expressed its final conclusion in the following words :
"Transport vehicles are provided by individuals carrying on business in them and those who carry on trade and commerce as a whole, can use these transport vehicles. The fact that on account of this taxation, the charges of transport vehicles are higher, let us say by an anna a maund is, in our opinion, merely an indirect or consequential result of this Act, and such an impediment may fairly be called remote. It would be a different matter if the taxation is so high that 500 it virtually kills trade and commerce by compelling the traders to raise their prices to an exorbitant rate. But this being not the nature of the tax in this case, and the taxation being not directly on trade, commerce or intercourse......... we are of opinion that this taxation can not be said to offend against Art. 301, for its effect on trade and commerce is only indirect and consequential and the impediment, if any, may fairly be regarded as remote." In view of that conclusion the Full Bench answered the question referred to it in the negative. The cases then went back to the Division Bench with the answer given by the Full Bench and the writ petitions were dismissed by the Division Bench by its judgment and order dated August 9, 1957. The three appellants then moved the High Court for a certificate under Art. 132 of the Constitution which certificate the High Court granted by its order dated October 16, 1957.
It may be here stated that neither the Division Bench nor the Full Bench of the Rajasthan High Court had the advantage of the decision of this Court in Atiabari Tea Co., case (1), which decision came much later in point of time. The main argument on behalf of the appellants before us has been that the provisions of the Act under which the appellants were sought to be taxed in respect of their motor vehicles plying on the Nasirabad-Deoli or Kishangarh road contravened Art.
301 of the Constitution and were not saved by Art. 304 (b) of the Constitution. We shall presently read the relevant provision of the Act, but before we do so we may briefly refer to one short point by way of clearing the ground for the discussion which will follow. Article 305 of the Constitution as it originally stood said that nothing in Arts, 301 and 303 shall affect (1) [1961] 1. S. C. R. 809.
501 the provisions of any existing law except in so far as the President may by order otherwise provide. This article was substituted by another article, somewhat wider in scope, by the Constitution (Fourth Amendment) Act, 1955. The new article repeated the words of the old article in the first part thereof and in the second part it said that nothing in Art. 301 shall affect the operation of any law made before the commencement of the Constitution (Fourth Amendment) Act, 1955, in so far as it relates to, or prevent Parliament or the Legislature of a State from making any law relates to, any such matter as is referred to in sub-cl. (ii) of cl. (6) of Art. 19 that sub-clause refers to the carrying on by the State or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise.
The first part of Art. 305 does not apply in the present cases because the expression "existing law" means any law, ordinance, order, bye-law etc. passed or made before the commencement of the Constitution. The Act which we are considering now in the present appeals was made in 1955, i.e., after the commencement of the Constitution. The second part of Art. 305 has also no hearing on the questions which we have to consider in these appeals. Article 305, old or new, is, therefore, out of our way.
We now proceed to read the relevant provisions of the Act.
The Act was made by the Rajpramukh of the State of Rajasthan on April 1, 1951. The history of the constitution of the United State of Rajasthan and the powers of the Rajpramukh under the covenant creating the State were stated in Thakur Amar Singhji v. State of Rajasthan(1) at pp. 312 to 316 of the report. With that history ,we are not concerned in the present cases. The competence of the Rajpramukh to make the Act (1) [1955] 2. S.C.R. 303.
502 was challenged in the High Court but was decided against the appellants. That point has not been agitated before us and we must proceed on the footing that the Act was validly made by the Rajpramukh. Section 4 of the Act is the charging section, the validity of which has been challenged before us on the ground that it violates the freedom of trade, commerce and intercourse granted under Art. 301 of the Constitution. It is, therefore, necessary to quote s. 4.
"4. Imposition of tax.-(1) Save as otherwise provided by this Act or by rules made thereunder or by any other law for the time being in force, no motor vehicle shall be used in any public place or kept for use in Rajasthan unless the owner thereof has paid in respect of it, a tax at the appropriate rate specified in the Schedules to this Act within the time allowed by section 5 and, save as hereinafter specified, such tax shall be payable annually notwithstanding that the motor vehicle may from time to time cease to be used.
(2) An owner who keeps a motor vehicle of which the certificate of fitness and the certificate of registration are current, shall, for the purposes of this Act be presumed to keep such vehicle for use.
(3) A person who keeps more than ten motor vehicles for use solely in the course of trade and industry shall be entitled to a deduction of ten per cent on the aggregate amount of tax to which he is liable.
"4. Explanation.-The expression trade and industry" includes transport for hire," Sections 5 to 7 deal with (1) payment of tax, (2) tax payable on first liability to tax, and (3) refund of tax.
With these details we are not concerned here. Section 8 imposes on the owner of every motor 503 vehicle an obligation to make a declaration every year in respect of the motor vehicle in the prescribed form stating the prescribed particulars etc.; it also imposes an obligation on every owner to pay the tax which he is liable to pay in respect of the motor vehicle. This section is also challenged as unconstitutional and it is obvious that it is connected with s. 4. If s. 4 is unconstitutional, so must be s. 8. Section 9 deals with the payment of additional tax in circumstances which need not be stated here. Section 10 deals with the grant of receipt and token. Section 11 says :
"11. Penalties under this Act.-whoever contravenes any of the provisions of this Act or of any rule made thereunder shall on conviction be punishable with fine which may extend to Rs. 100 and in the event of such person having been previously convicted of an offence under this Act or under any rule made thereunder with fine which may extend to Rs.
200." Section 12 deals with the compounding of offences and s. 13 lays down that when any person without any reasonable cause fails or refuses to pay the tax, the Taxation Officer may forward to the Collector of the district concerned a certificate over his signature specifying the amount of tax due from such person and the Collector shall recover the tax as if it were an arrears of land revenue. Section 14 provides for appeals to the Transport Commissioner. Section 16 lays down that the liability of a person to pay the tax shall not be questioned or determined otherwise than as provided in the act or in the rules made there under.
Sections 17 to 21 deal with certain ancillary matters and s. 22 enables the Government to make rules for carrying into effect the purpose of the Act. There are four Schedules to the Act to which a more detailed reference will be made later. It is enough to state here that the 504 Schedules divide motor vehicles into two parts Schedule I deals with vehicles other than transport vehicles plying for hire or reward; Schedule II deals with transport vehicles of two kinds transport vehicles and goods vehicles; Schedule III deals with goods vehicles registered outside Rajasthan but using roads in Rajasthan; and Schedule IV deals with vehicles used for the carriage of goods in connection with a trade or business carried on by the owner of the vehicle under a private carrier's permit. Various rates of tax are provided for various kinds of vehicles in these Schedules.
The High Court has pointed out that Schedule I is concerned with vehicles other than transport vehicles and is mainly concerned with what would come within the term ",intercourse" in Art. 301 and the other Schedules deal with what would come within the term "trade and commerce" in that article. The result of reading s. 4 of Act with the Schedules is that on one can use ox keep a motor vehicle in Rajasthan without paying the appropriate tax for it and if he does so he is made liable to the penalties imposed under s. 11 of the Act. In brief, this appears to be the scheme of the Act.
Is this scheme in conflict with the freedom of trade, commerce and intercourse within the territory of India assured by Art. 301 and other connected articles in Part XIII of the Constitution ? That is the problem before us.
It is necessary, therefore, to read at this stage the relevant articles in Part XIII of the Constitution. For this purpose we must read Arts. 301 to 304 as they stood at the relevant time.
"301. Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free.
302. Parliament may by law impose such restrictions on the freedom of trade, 505 commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest.
303. (1) Notwithstanding anything in Articles 302, neither Parliament nor the Legislature of a State shall have power to make any law giving, or authorising the giving of, any preference to one State over another, or making, or authorising the making of, any discrimination between one State and another by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule.
(2) Nothing in clause (1) shall prevent Parliament from making any law giving or authorising the giving of, any preference or making, or authorising the making of, any discrimination if it is declared by such law that it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India.
304. Notwithstanding anything in Article 301 or Article 303, the Legislature of a State may by law(a) impose on goods imported from other States any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced; and (b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest :
Provided that no Bill or amendment for 506 the purposes of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President".
Article 305 we have already stated is out of our way.
Article 306, which was later repealed by the Constitution (Seventh Amendment) Act, 1956, is also not material for the consideration of the problem before us. Article 307 is also not material as it relates to the appointment of an appropriate authority for carrying out the purposes of Arts.
301 to 304.
The series of articles on the true scope and effect of which the decision of the problem before us depends were the subject matter of consideration of this Court in the Atiabari Tea Co. case (1), In that decision three views were expressed and one of the questions mooted and argued before us is whether the principle of the majority decision in that case requires reconsideration, or modification in any respect; or whether any of the other two views expressed therein is the correct view. Another connected question is that if the majority view is the correct view, does the principle underlying it apply to the facts of the present cases It is, therefore, necessary to set out briefly the facts of the Atiabari Tea Co. case (1) and the three views expressed therein. The three appellants in that case were tea companies, two of which carried on the trade of growing tea in Assam and the other carried on its trade in Jalpaiguri in West Bengal. They carried their tea to Calcutta in order that it might be sold in the Calcutta market for home consumption or export outside India. Tea produced in Jalpaiguri had to pass through a few miles of territory in Assam, while the tea produced in Assam had to go all the way through Assam to reach Calcutta. Besides the tea which was carried by rail, a substantial quantity had to go by road or by inland water-ways and as such (1) (1961) 1 S.C.R. 809.
507 became liable to pay the tax leviable under the Assam Taxation (on goods carried by Roads or Inland Waterways) Act, 1954. That Act levied a tax on certain goods carried by road or inland waterways in the State of Assam and the validity of the levy of such a tax was in question in the Atiabari Tea Co. case. (1). The principal ground of attack was that the Assam Act violated the provisions of Art. 301 of the Constitution and was not saved by the provisions of Art. 304(b). We may now summarise the views expressed in that decision. First, as to the views of the learned Chief Justice: He expressed the view that taxation simpliciter was not within the terms of Art. 301 and a tax on movement of or passenger did not necessarily connote impediment or restraint in the matter of trade and commerce. He draw a distinction between taxation as such for the purpose of revenue on the One hand and taxation for the purpose of making discrimination or giving preference on the other hand; the letter, he said, could be treated as impediment to free trade and commerce. He expressed his final conclusion in these words.
"Thus, on a fair construction of the provisions of Part XIII, the following propositions emerge: (1) trade, commerce, and intercourse throughout the territory of India are not absolutely free, but are subject to certain powers of legislation by Parliament or the Legislature of a State; (2) the freedom declared by Art. 301 does not mean freedom from taxation simpliciter, but does mean freedom from taxation which has the effect of directly impeding the free flow of trade, commerce and intercourse; (3) the freedom envisaged in Art. 301 is subject to nondiscriminatory restrictions imposed by Parliament in public interest (Art. 392); (4) even discriminatory or (1) [1961] 1.S.C.R.809.
508 preferential legislation may be made by Parliament for the purpose of dealing with an emergency like a scarcity of goods in any part of India (Art. 303(2)); (5) reasonable restrictions may be imposed by the Legislature of a State in the public interest (Art.
304(b)); (6) non-discriminatory taxes may be imposed by the Legislature of a State on goods imported from another State or other States, if similar taxes are imposed on goods produced of manufactured in that State (Art. 304(a);
and lastly (7) restrictions imposed by existing laws have been continued, except in so far as the President may by order otherwise direct(Art. 305)." (pp. 831-832.) The majority view differed from that of the learned Chief Justice in that it did not accept as correct the contention that tax laws were governed by the provisions of Part XII of the Constitution only and were outside Part XIII. The majority expressed the view that when Art. 301 provided that trade shall be free throughout the territory of India, it was the movement or transport part of the trade that must be free. The majority said:
"It is a federal constitution which we are interpreting, and so the impact of Art. 301 must be judged accordingly. Besides, it is not irrelevant to remember in this connection that the Article we are construing imposes a constitutional limitation on the power of the Parliament and the State Legislatures to levy taxes, and generally, but for such limitation, the power of taxation would be presumed to be for public good and would not be subject to judicial review or scrutiny. Thus considered we think it would be reasonable and proper to hold that restrictions freedom from which is 509 guaranteed by Art. 301, would be such restrictions as directly and immediately restrict or impede the free flow or movement of trade.
Taxes may and do amount to restrictions; but it is only such taxes as directly and immediately restrict trade that would fall within the purview of Art. 301. The argument that all taxes should be governed by Art. 301 whether or not their impact on trade is immediate or mediate, direct or remote, adopts, in our opinion, an extreme approach which cannot be upheld." (p. 860.) The third view held by Shah, J., was that the freedom contemplated was freedom of trade, commerce and intercourse in ill their varied aspects inclusive of all activities which constitute commercial intercourse and not merely restrictions on the movement aspect.
He said :
"The guarantee of freedom of trade and commerce is not addressed merely against prohibitions, complete or partial; it is addressed to tariffs, licensing, marketing regulations, price-control, nationalization, economic or social planning, discriminatory tariffs, compulsory appropriation of goods, freezing or stand-still orders and similar other impediments operating directly and immediately on the freedom of commercial intercourse as well. Every sequence in the series of operations which constitutes trade or commerce is an act of trade or commerce and burdens or impediments imposed on any such step are restrictions on the freedom of trade commerce and intercourse. What is guaranteed is freedom in its widest amplitude-freedom from prohibition, control, burden or impediment in commercial intercourse." (p. 874.) So far we have set out the factual and legal background against which the problem before us 510 has to be solved. We must now say a few words regarding the historical background. It is necessary to do this, because extensive references have been made to Australian and American decisions, Australian decisions with regard to the interpretation of s. 92 of the Australian Constitution and American decisions with regard to the Commerce Clause of the American Constitution. This Court pointed out in the Atiabari Tea Co. case (1) that it would not be always safe to rely upon the American or Australian decisions in interpreting the provisions of our Constitution. Valuable as those decisions might be in showing how the problem of freedom of trade, commerce and intercourse was dealt with in other federal constitutions, the provisions of our Constitution must be interpreted against the historical background in which our Constitution was made; the background of problems which the Constitution makers tried to solve according to the genius of the Indian people whom the Constitution-makers represented in the Constituent Assembly. The first thing to be noticed in this connection is that the Constitution-makers were not writing on a clean slate. They had the Government of India Act. 1935, and they also had the administrative set up which that Act envisaged.
India then consisted of various administrative units known as Provinces, each with its own administrative set up.
There were differences of language, religion etc. Some of the Provinces were economically more developed than the others. Even inside the same Province, there were underdeveloped and highly developed areas from the point of view of industries, communications etc. The problem of economic integration with which the Constitution-makers were faced was a problem with many facts. Two questions, however, stood out,; one question was how to achieve a federal, economic and fiscal integration, so that economic policies affecting the interests of India as a whole could be carried out (1) [1961] 1. S. C. R. 809.
511 without putting an ever-increasing strain on the unity of India, particularly in the context of a developing economy.
The second question was how to foster the development of areas which were under developed without creating too many preferential or discriminative barriers. Besides the Province, there were the Indian States also known as Indian India. After India attained political freedom in 1947 and before the Constitution was adopted, the process of merger and integration of the Indian States with the rest of the country had been accomplished so that when the Constitution was first passed the territory of India consisted of Part A States, which broadly stated, represented the Provinces in British India, and Part B States which were made up of Indian States. There were trade barriers raised by the Indian States in the exercise of their legislative powers and the Constitution-makers had to make provisions with regard to those trade barriers as well. The evolution of a federal structure or a quasi-federal structure necessarily involved, in the context of the conditions then prevailing, a distribution of powers and a basic part of our Constitution relates to that distribution with the three legislative lists in the Seventh Schedule. The Constitution itself says by Art. 1 that India is a Union of States and in interpreting the Constitution one must keep in view the essential structure of a federal or quasi-federal Constitution, namely, that the units of the Union have also certain powers as has the Union itself One of the grievances made on behalf of the intervening States before us was that the majority view in the Atiabari Tea Co. case(1) did not give sufficient importance to the power of the States under the Indian Constitution to raise revenue by taxes under the legislative heads entrusted to them, in interpreting the series of articles relating to trade, commerce and intercourse in Part XIII of the Constitution. It has been often stated that freedom of (1) [1931] 1.S.C.R. 809.
512 inter-State trade and commerce in a federation has been a baffling problem to constitutional experts in Australia, in America and in other federal constitutions. In evolving an integrated policy on this subject our Constitution-makers seem to have kept in mind three main considerations which may be broadly stated thus: first, in the larger interests of India there must be free flow of trade, commerce and intercourse, both inter-State and intra-State; second, the regional interests must not be ignored altogether; and third, there must be a power of intervention by the Union in any case of crisis to deal with particular problems that may arise in any part of India. As we shall presently show, all these three considerations have played their part in the series of articles which we have to consider in Part XIII of the Constitution. Therefore, in interpreting the relevant articles in Part XIII we must have regard to the general scheme of the Constitution of India with special reference to Part III (Fundamental Rights), Part XII (Finance, Property etc. containing Arts. 276 and 286) and their interrelation to Part XIII in the context of a federal or quasi federal constitution in which the States have certain powers including the power to raise revenues for their purposes by taxation.
On behalf of the appellants it has been contended before us that s. 4 of the Act read with the Schedules constitutes a direct and immediate restriction on the movement of trade and commerce with and within Rajasthan inasmuch as motor vehicles which carry passengers and goods within or through Rajasthan have to pay the tax which, it is stated, imposes a pecuniary burden on a commercial activity and is, therefore, hit by Art. 301 of the Constitution and is not saved by Art.
304(b) in as much as the proviso to Art. 304(b) was not complied with nor was the Act assented to by the President within the meaning of Art. 255 of the Constitution.
513 Learned Counsel for the appellants has submitted before us that the correct interpretation of the series of relevant articles in Part XIII of the Constitution is the one made by Shah, J., in the Atiabari Tea Co. case(1). He has, however, submitted that even on the interpretation accepted by the majority of Judges in the Atiabari Tea Co. case(1) he is entitled to succeed, because the relevant provisions of the Act constitute a direct and immediate restriction on the movement part of trade, commerce and intercourse. On behalf of the respondents the argument has proceeded on the footing that taxation per so i.e. taxation for the purpose of raising revenue or for the maintenance of roads etc. is not hit by Art. 301 and the impugned provisions of the Act in question did not constitute an immediate or direct impediment on the movement of trade and commerce inasmuch as the tax imposed was a consolidated tax on the vehicle itself though the quantum of the tax was fixed in some instances with reference to the seating capacity or loading capacity etc The argument is that in this respect the facts of the present cases differ from the facts of the Atiabari Tea Co. case(1); it is argued that in the latter the tax was on the carriage of goods, whereas in the present cases the tax is a consolidated tax on the vehicle itself, like a property tax, and, therefore, it does not relate to the movement part of trade, commerce and intercourse, though it may have an indirect effect on trade, and commerce by raising the tariff or fare for passengers and goods. The learned Counsel for the respondents has in this way tried to distinguish the majority decision in the Atiabari Tea Co. case(1), but he has mainly argued in favour of the view expressed by the learned Chief Justice. On behalf of the interveners, some have supported the majority view with or without modifications and some the other two views. Mr. N. C. Chatterjee appearing on behalf of the Union of India supported the majority view, though the stand taken by the Attorney (1) [1961] 1. S. C. R. 809.
514 General on behalf of the Union of India in the Atiabari Tea Co. case(1) was somewhat different. Mr. Ranadeb Chaudhuri appearing on behalf of one of the interveners (M/s. M.A. Tulloch & Co.) has accepted the majority view with some modifications. He has stated that Art. 301 relates to movement or carriage; he has called it the "channeling" of trade and commerce. He has, however, tried to reconcile the various provisions in Part XIII by suggesting that there are two connected but independent subjects dealt with therein;
one is freedom of movement of trade, and commerce and in course (this, he has described, as "channeling" of trade, commerce and intercourse), and the second is protection from discrimination and preference which is not necessarily connected with movement but may arise from subsidy etc.
These are the two ideas which, according to him, inspired the relevant series of articles in Part XIII. On behalf of some of the interveners the argument has been that the freedom declared under Art. 301 is not freedom from such regulatory measures as do not impede trade, commerce and intercourse but rather facilitate such trade, commerce and intercourse, e.g. traffic regulations for safeguarding public health, such as, prohibiting the sale of adulterated food etc. This view suggests that in the matter of taxation, such taxes are compensatory in nature, namely, those levied for the maintenance of roads on which traffic, is to move, do not come within the restrictions freedom from which is contemplated by Art. 301. This is the view which Mr. Sikri, Advocate-General of Punjab, has mainly contended for. Mr, Seervai appearing on behalf of the State of Maharashtra and some other States has contended that Part XIII of the Constitution is confined to such action, legislative or executive, as is taken in relation to any of the entries relating to trade and commerce in any of the lists in the Seventh Schedule, namely, entries relating to 41 and 42 in list (1) [1964] 1. S. C. R. 809.
515 I, entry 26 of list II, and entry 33 of list III. The expression "throughout the territory of India" occurring in Art. 301 has reference, according to this view, to space rather than to movement. According to Mr. Seervai the mode of approach should be to consider (i) the position of the States in the Indian Constitution with plenary powers in their respective fields; (ii) the historical background of s. 297 of the Government of India Act, 1935; (iii) the decisions of the Australian cases upto 1950 when the Constitution of India was made; and (iv) Part XIII of the Constitution as compared and contrasted with Part III and Part XII thereof. As to taxation, his contention is that it does not come within Part XIII except to the extent mentioned in Art. 304(a). Mr. Lalnarain Sinha appearing for the State of Bihar has supported the view of the learned Chief Justice in Atiabari Tea Co. case(1) though the reasons given by him are somewhat different. His argument has been that Art. 301 secures for trade, commerce and intercourse throughout the territory of India a qualified freedom from restrictions based on geographical classifications only; the freedom thus secured is in regard to barriers (in the geographical sense) impeding trade, commerce and intercourse between one State and another or between one territory and another within or without the same State, and also against territorial discriminations in respect of trade, commerce and intercourse either inter-State or intra-state. With regard to taxation, his contention is that taxes (meant for raising revenue only and called fiscal taxes) do not operate as inter-State or inter-territorial barriers nor involve any territorial discriminations, and they do not come within Part XIII. Mr. D. Sahu appearing for the State of Orissa argued that the freedom granted by Art. 301 was confined to (i) inter-State barriers, and (ii) customs-barriers which at one time existed between the Indian States and adjacent (1) [1961] 1 S.C.R. 809.
516 British Indian territory. According to him, the intra State aspect of the freedom assured by Art. 301 was confined to old customs-barriers only which some of the Indian States which have now merged in particular States of the Indian Republic had earlier imposed. Mr. C. B. Agarwala appearing for the State of Uttar Pradesh argued that the subject matter of Art. 301 was trade, commerce and intercourse, namely the entries relating to trade and commerce in any of the lists in the Seventh Schedule ; but the restrictions from which freedom was granted might come from any direction ; they might come from legislative or executive action relating to other entries also.
We have tried to summarise above the various stand points and views which were canvassed before us and we shall now proceed to consider which, according to us, is the correct interpretation of the relevant articles in Part XIII of the Constitution. We may first take the widest view, the view expressed by Shah, J., in the Atiabari Tea Co. case(1) a view which has been supported by the appellants and one or two of the interveners before us. This view, we apprehend, is based on a purely textual interpretation of the relevant articles in part XIII of the Constitution and this textual interpretation proceeds in the following way. Article 301 which is in general terms and is made subject to the other provisions of Part XIII imposes a general limitation on the exercise of legislative power, whether by the Union or the States, under any of the topics-taxation topics as well as other topics-enumerated in the three lists of the Seventh Schedule, in order to make certain that "trade, commerce and intercourse thought the territory of India shall be free".
Having placed a general limitation on the exercise of legislative powers by Parliament and the State Legislatures, Art. 302 relaxes that restriction in favour of Parliament by providing that (1) [1961] 1. S. C. R. 809.
517 authority "may by law impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part the territory of India as may be required in the public interest". Having relaxed the restriction in respect of Parliament under Art. 302, a restriction is put upon the relaxation by Art. 303(1) to the effect that Parliament shall not have the power to make any law giving any preference to any one State over another or discriminating between one State and another by virtue of any entry relating to trade and commerce in lists I and III of the Seventh Schedule. Article 303(1) which places a ban on Parliament against the giving of preferences to one State over another or of discriminating between one State and another, also provides that the same kind of ban should be placed upon the State Legislature also legislating by virtue of any entry relating to trade and commerce in lists II and III of the Seventh Schedule. Article 303 (2) again carves out an exception to the restriction placed by Art. 303(1) on the powers of Parliament, by providing that nothing in Art.
303(1) shall prevent Parliament from making any law giving preference to one State over another or discriminating between one State and another, if it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India.
This exception applies only to Parliament and not to the State Legislatures. Article 304 comprises two clauses and each clause operates as a proviso to Arts. 301 and 303.
Clause (a) of that article provides that the Legislature of a State may "impose on goods imported from other States any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced." This clause, therefore, permits the levy on goods imported from 518 sister States any tax which similar goods manufactured or produced in that State are subject to under its taxing laws.
In other words, goods imported from sister States are placed on a par with similar goods manufactured or produced inside the State in regard to State taxation within the State allocated field. Thus the States in India have full power of imposing what in American State legislation is called the use tax, gross receipts tax etc., not to speak of the familiar property tax, subject only to the condition that such tax is imposed on all goods of the same kind produced or manufactured in the taxing State, although such taxation is undoubtedly calculated to fetter inter State trade and commerce. As was observed by Patinjali Sastri, C.J., in State of Bombay v. United Motors(1) the commercial unity of India is made to give way before the State power of imposing 'any' non-discriminatory tax on goods imported from sister States. Now cl. (b) of Art. 301 provides that notwithstanding anything in Art. 301 or Art. 303, the Legislature of a State may by law impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest. The proviso to el. (b) says that no bill or amendment for the purpose of cl. (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President. This provision appears to be the State analog to the Union Parliament's authority defined by Art. 302, in spite of the omission of the word "reasonable' before the word restrictions' in the latter article. Leaving aside the prerequisite of previous Presidential sanction for the validity of State legislation under cl. (b) provided in the proviso thereto, there are two important differences between Art. 302 and Art. 301(b) which require special mention. The first is that while the power of Parliament under (1) [1953] S.C.R. 1069.
519 Art. 302 is subject to the prohibition of preferences and discriminations decreed by Art. 303(1) unless Parliament makes the declaration contained in Art. 303(2), the State's power contained in Art. 304(b) is made expressly free from the prohibition contained in Art. 303(1), because the opening words of Art. 304 contain a non obstante clause both to Art. 301 and Art. 303. The second difference springs from the fact that while Parliament's power to impose restrictions under Art. 302 upon freedom of commerce in the public interest is not subject to the requirement of reasonableness, the power of the States to impose restrictions on the freedom of commerce in the public interest under Art. 304 is subject to the condition that they are reasonable.
On the basis of the aforesaid textual construction, which is perhaps correct so far as it goes, the view expressed is that the freedom granted by Art. 301 is of the widest amplitude and is subject only to such restrictions as are contained in the succeeding articles in Part XIII. But even in the matter of textual construction there are difficulties. One of the difficulties which was adverted to during the Constituent Assembly debates related to the somewhat indiscriminate or inappropriate use of the expressions "subject to" and ""notwithstanding" in the articles in question. Article 302, as we have seen, makes a relaxation in favour of Parliament. Article 303 again imposes a restriction on that relaxation "notwithstanding anything in Article 302 but Art. 303 relates both to Parliament and the State Legislature, though Art. 302 makes no relaxation in favour of the State Legislature. The non obstante clause in Art. 303 is, therefore, somewhat inappropriate. Clause (2) of Art. 303 carves out an exception from the restriction imposed on Parliament by cl.
(1) of Art. 303. But again cl. (2) relates only to Parliament and not to the State Legislature even though cl.
(1) relates to both. Article 304 520 again begins with a non obstante clause mentioning both Art.
301 and Art. 303, though Art. 304 relates only to the Legislature of a State. Article 303 relates to both the State Legislature and Parliament and again the non obstante clause in Art. 304 is somewhat inappropriate. The fact of the matter is that there is such a mix up of exception upon exception in the series of articles in ]Part XIII that a purely textual interpretation may not disclose the true intendment of the articles. This does not mean that the text of the articles, the words used therein, should be ignored. Indeed, the text of the articles is a vital consideration in interpreting them; but we must at the same time remember that we are dealing with the Constitution of a country and the inter-connection of the different parts of the constitution forming part of an integrated whole must not be lost sight of. Even textually, we must ascertain the true meaning of the word "free' occurring in Art. 301. From what burdens or restrictions is the freedom assured ? This is a question of vital importance even in the matter of construction. In s. 92 of the Australian Constitution the expression used was 'absolutely free' and repeatedly the question was posed as to what this freedom meant. We do not propose to recite the somewhat checkered history of the Australian decisions in respect of which Lord Porter, after a review of the earlier cases, said in Commonwealth of Australia v. Bank of New South Wales (1) that in the "labyrinth of cases decided under s. 92 there was no golden thread." What is more important for our purpose is that he expressed the view that two general propositions stood out from the decisions: (i) that regulation of trade, commerce and intercourse among the States is compatible with its absolute freedom, and (ii) that s. 92 of the Australian Constitution is violated only when a legislative or (1) [1950] A.C. 235, 521 executive act operates to restrict such trade, commerce and intercourse directly and immediately as distinct from creating some indirect or inconsequential impediment which may fairly be regarded as remote. Lord Porter admitted "that in the application of these general propositions, in determining whether an enactment is regulatory or something more or, whether a restriction is direct or only remote or incidental, there cannot fail to be differences of opinion." It seems clear, however, that since "the conception of freedom of trade, commerce and intercourse in a community regulated by law presupposes some degree of restriction upon the individual", that freedom must necessarily be delimited by considerations of social orderliness. In one of the earlier Australian decisions (Duncan v. The State of Queensland) (1), Griffith, C.J., said :
"'But the word "free" does not mean extra legem, any more than freedom means anarchy.
We boast of being an absolutely free people, but that does not mean that we are not subject to law". (p. 573) As the language employed in Art. 301 runs unqualified the Court, bearing in mind the fact that provision has to be applied in the working of an orderly society, has necessarily to add certain qualifications subject to which alone that freedom may be exercised. This point has been very lucidly discussed in the dissenting opinion which Fullagar, J., wrote in Mc Carter v. Brodie (2), an opinion which was substantially approved by the Privy Council in Hughes and Vale Proprietary Ltd. v. State of New South Wales (3). The learned Judge gave several examples to show the distinction between what was merely permitted regulation and what true interference with freedom of trade and commerce.
He pointed out that in the matter of motor vehicles (1) [1916] 22 C.L.R. 556 (2) [1950] 80 C.L.R. 432.
(3) [1955] A.C. 241.
522 most countries have legislation which requires the motor vehicle to be registered and a fee to be paid on registration. Every motor vehicle must carry lamps of a specified kind in front and at the rear and in the hours of darkness these lamps must be alight if the vehicle is being driven on the road, every motor vehicle must carry a warning device, such as a horn; it must not be driven at a speed or in a manner which is dangerous to the public. In certain localities a motor vehicle must not be driven at more than a certain speed. The weight of the load which may be carried on a motor vehicle on a public highway is limited. Such examples may be multiplied indefinitely. Nobody doubts that the application of rules like the above does not really affect the freedom of trade and commerce; on the contrary they facilitate the free flow of trade and commerce. the reason is that these rules cannot fairly be said to impose a burden on a trader or deter him from trading: it would be absurd, for example, to suggest that freedom of trade is impaired or hindered by laws which require a motor vehicle to keep to the left of the road and not drive in a manner dangerous to the public. If the word 'free' in Art. 301 means 'freedom to do whatever one wants to do, then chaos may be the result; for example, one owner of a motor vehicle may wish to drive on the left of the road while another may wish to drive on the right of the road. If they come from opposite directions, there will be an inevitable clash.
Another class of examples relates to making a charge for the use of trading facilities, such as, roads, bridges, aerodromes etc. The collection of a toll or a tax for the use of a road or for the use of a bridge or for the use of an aerodrome is no barrier or burden or deterrent to traders who, in their absence, may have to take a longer or less convenient or more expensive route. such compensatory taxes are no hindrance to anybody's freedom so long as they remain reasonable; but they could of course be converted into a hindrance to the freedom of trade. If the 523 authorities concerned really wanted to hamper anybody's trade, they could easily raise the amount of tax or toll to an amount which would be prohibitive or deterrent or create other impediments which instead of facilitating trade and commerce would hamper them. It is here that the contrast, between 'freedom' (Art. 301) and restrictions' (Arts. 302 and 304) clearly appears: that which in reality facilitates trade and commerce is not a restriction, and that which in reality hampers or burdens trade and commerce is a restriction. It is the reality or substance of the matter that has to be determined. It is not possible a pri
