सं Samvidhan

The Constitution of India

Article 303

Restrictions on the legislative powers of the Union and of the States with regard to trade and commerce

Why this exists

India's Constitution-makers wanted the country to function as one unified economic space, not a patchwork of states protecting their own markets like separate countries. Article 303 was designed to prevent Parliament or State Legislatures from using trade and commerce laws to discriminate between states — for example, taxing goods from another state higher than local goods. But the framers also recognized emergencies happen, like famines or shortages, where the Union might need to direct goods preferentially to affected regions. Clause (2) carves out that narrow, declared exception.

How courts read it

The Supreme Court has read Article 303 alongside Articles 301 and 302, treating it as a check on discriminatory economic legislation rather than a total bar on all trade regulation. In cases like Atiabari Tea Co. v. State of Assam and Automobile Transport v. State of Rajasthan, the Court clarified that reasonable, non-discriminatory regulatory or compensatory taxes (like fees for using roads) don't violate this Article, but hidden protectionism disguised as regulation does. Courts have emphasized that clause (2)'s scarcity exception must be expressly declared in the law itself, not just argued in court later.

Common misconceptions
  • Myth: Article 303 means the government can never regulate trade between states.
    Fact: It only bans unfair discrimination or preference between states using trade-and-commerce laws; reasonable, non-discriminatory regulation (like uniform taxes for road use) is still allowed, as courts have clarified.
  • Myth: Any law citing 'public interest' can create trade preferences between states.
    Fact: Only Parliament — not State Legislatures — can create such preferences, and only through a law that expressly declares it's addressing a scarcity of goods.