TMI Blog1962 (4) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 and the views expressed in the decision of this Court in Atiabari Tea Co. Ltd. v. The State of Assam ([1961] 1. S. C. R. 809) 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 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 unconstitutiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sting 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([1955] 2. S.C.R. 303) 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 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 befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 thereunder. 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 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; an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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 ([1961] 1. S. C. R. 809.) 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 inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gislative 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([1931] 1.S.C.R. 809) 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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([1961] 1. S. C. R. 809); 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([1961] 1. S. C. R. 809), 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... residential 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 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 amp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of which Lord Porter, after a review of the earlier cases, said in Commonwealth of Australia v. Bank of New South Wales ([1950] A.C. 235) 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 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 up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative power of the State Legislatures which power has been held to be plenary with regard to subjects in list 11. The States must also have revenue to carry out their administration and there are several items relating to the imposition of taxes in list 11. The Constitution-makers must have intended that under those items the States will be entitled to raise revenue for their own purposes. If the widest view is accepted, then there would be for all practical purposes, an end of State autonomy even within the fields allotted to them under the distribution of powers envisaged by our Constitution. An examination of the entries in the lists of the Seventh Schedule to the Constitution would show that there are a large number of entries in the State list (list II) and the Concurrent list (list III) under which a State Legislature has power to make laws. Under some of these entries the State Legislature may impose different kinds of taxes and duties, such as property tax,, sales tax, excise duty etc., and legislation in respect of any one of these items, may have an indirect effect on trade and commerce. Even laws other than taxation laws, made under different entries in the lists refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive entry in any of the three list relating to intercourse and the word throughout' has reference to space rather than to movement. The expression ,subject to' it is stated, means conditional upon', thus connecting the provisions of Art. 303 with the provisions of Art. 301. Article 303 specifically uses the expression by virtue of any entry relating to trade and commerce in any of the lists in the Seventh Schedule. It is argued that by reason of the connection between Art. 301 and Art. 303, the words by virtue of any entry relating to trade and commerce etc. must be read into Art. 301 also so that Art. 301 will then be construed as a fetter on the commerce power i. e., the power given to the Legislature to make laws under entries relating to trade and commerce only. As to taxation being out of the provisions of Part XIIL of the Constitution except for Art. 304(a), the argument is that we must look to the historical background of s. 297 of the Government of India Act, 1935, and Arts. 274, 276 and 285 to 288 in Part XII of the Constitution. It is pointed out that the power to tax is an incident of sovereignty and it is divided between the Union and the States under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the provisions of Art, 245, we find it difficult to accept the argument that the restrictions in Part XIII of the Constitution do not apply to taxation laws. As to the argument that Art. 301 must take colour from Art. 303, we are unable to accept as correct the argument that the provisions of Art. 303 must delimit the general terms of Art. 301. It seems to us that so far as Parliament is concerned, Art. 303(1) carves out an exception from the relaxation given in favour of Parliament by Art. 302 ; the relaxation given by Art. 302 is itself in the nature of an exception to the general terms of Art. 301. It would be against the ordinary canons of construction to treat an exception or proviso as having such a repercussion on the interpretation of the main enactment so as to exclude from it by implication what clearly falls within its express terms. After carefully considering the arguments advanced before us we have come to the conclusion that the narrow interpretation canvassed for on behalf of the majority of the State cannot be accepted, namely, that the relevant articles in Part XIII apply only to legislation in respect of the entries relating to trade and commerce in any of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 is that Art. 19 guarantees the right to freedom to a citizen whereas freedom granted by Art. 301 is not confined to citizens. Another distinction which has been drawn is that Art. 19 looks at the right from the point of view of an individual, whereas Art. 301 looks at the matter from the point of freedom of the general volume of trade, commerce and intercourse. We do not think that this distinction, if any such distinction at all exists, is material in the present cases, because an individual trade may complain of a violation of his freedom guaranteed under Art. 19(1)(g) and he may also complain if the freedom assured by Art. 301 has been violated. In a particular set of circumstances the two freedoms need not be the same or need not coalesce. In some of the Australian decisions a distinction was sought to be drawn between the free flow of the same volume of inter-State trade and the individual's right to carry on his trade in more than one State and it was argued that s. 92 of the Australian Constitution related to the free flow of the volume of trade as distinguished from an individual's right to carry on his trade. Such a distinction was negatived and the Privy Council ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon whether we take the word intercourse' in a wide sense or in a narrow sense. Even taking the word ,intercourse' in a wide sense, the question will still be what does the word ,free' mean? Does it mean free from all regulation which is necessary for an orderly society? We have already stated that the word 'free' in Art. 301 cannot be given that wide meaning. We have, therefore, come to the conclusion that neither the widest interpretation nor the narrow interpretations canvassed before us are acceptable. The interpretation which was accepted by the majority in the Atiabari Tea Co. case is correct, but subject to this clarification. Regulatory measures or measures imposing compensatory taxes for the s use of trading facilities do not come within the purview of the restrictions contemplated by Art. 301 and such measures need not comply with the requirements of the proviso to Art. 304(b) of the Constitution. Now the question is, do the relevant provisions of the Act read with the Schedules fall within what we have called permitted regulation which does not really or materially affect freedom of trade, commerce and intercourse; or do the taxes imposed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed are really taxes on motor vehicles which use the roads in Rajasthan or are kept for use therein, either throughout the whole area or parts of it. The tax is payable by all owners of motor vehicles, traders or otherwise. In dealing with the question whether these taxes were reasonable restrictions on the right of individuals to move freely throughout the territory of India etc. the High Court said: In this connection, it is well to remember that the State maintains old roads, and makes new ones, and these roads are at the disposal of those who use motor vehicles either for private purposes or for trade or commerce. This naturally costs the State. It has, therefore, to find funds for making new roads and maintenance of those that are already in existence. These funds can only the raised through taxation, and if the State taxes the users of motor vehicles in order to make and maintain roads, it can hardly be said that the State is putting unreasonable restrictions on the individuals' right to move freely throughout the territory of India, or to practice any profession or to carry on any occupation, trade or business. We have looked into figures of income and expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch user may at some time be compensatory and at others not so. It seems to us that a working test for deciding whether a tax is compensatory or not is to enquire whether the trades people are having the use of certain facilities for the better conduct of their business and paying not patently much more than what is required for providing the facilities. It would be impossible to judge the compensatory nature of a tax by a meticulous test, and in the nature of things that cannot be done. Nor do we think that it xi ill make any difference that the money collected from the tax is not put into a separate fund so long as facilities for the trades people who pay the tax are provided and the expenses incurred in providing them are born by the State out of whatever source it may be. In the instruments of commerce that have been mentioned is no violation of the freedom of inter-State trades lies in the relation to inter-state trade which their nature and purpose give them. The reason why public authority must maintain them is in order that the commerce may use them, and so for the commerce to bear or contribute to the cost of their upkeep can involve no detraction from the freedom of commer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made only by virtue of entry, 42 of List I entry 26 of List If and entry 33 of List III of the Seventh Schedule to the Constitution. (5) The law of fiscal taxation is entirely outside the domain of freedom declared by Art. 301. All the learned counsel appearing in the case has agreed, or at any rate no argument was advanced to the contrary, that the freedom, whatever may be its content or scope on which there is difference of opinion, relates to both inter-State and intra-State trade. Before considering the provisions of the said articles, it will be useful to make certain general observations. We have to bear in mind in approaching the problem presented before us that our Constitution was not written on clean slate. Many of the concepts were borrowed from the Government of India Act or from other Constitutions and adapted to suit the conditions of our country. We cannot ignore the fact that the Constitution was drafted by persons some of whom had a deep knowledge of the constitutional problems of other countries; and therefore, they must be assumed to have had the knowledge of the interpretation put upon certain legal concepts by the highest tribunals of those countries. At th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deed, they have adopted the commerce power to meet all the demands, namely, economic, commercial, industrial and transport revolutions of that country. It is not necessary for the purpose of this case to consider the conflict or the various nuances of the decision the concept of commerce was enlarged or reduced to meet the exigencies of different situations; but the common thread was that transportation across the borders, either physically or conceptually, was uniformly held to be a necessary ingredient of the expression commerce . After noticing the conflict, Willis in his book on Constitutional Law, summarizes the latest position thus, at p. 288: ............... today the correct definition of commerce is that it is traffic and commercial intercourse. This, of course, gives Congress power wherever traffic or intercourse concerns an inter-State market. When commerce is properly defined as traffic, and the mental picture is formed, not of an isolated journey across a state boundary line, but of an onward coursing stream of business which knows no state lines, which is constantly fed and as constantly feeds the streams of production, and which debauches into the inter-state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an law on the commerce clause. Under that Act, certain defined powers of legislation are conferred on the Commonwealth in respect of trade and commerce. Section 51 reads: Trade and commerce with other countries and among the States . Section 98 says: The power of the Parliament to make laws with respect to trade and commerce extends to navigation and shipping and to railways the property of any State . Section 99 prohibits the Commonwealth, by any law or regulation of trade, commerce, or revenue, from giving preference to one State or any part thereof over another State or any part thereof. Section 100 prohibits the Commonwealth from abridging, the right of a State or of the residents therein to the reasonable use of the waters of rivers for conservation or irrigation. Other legislative powers are conferred in respect of specific subjects' of trade and commerce, such as, bounties, currency, coinage, bills of exchange, bankruptcy, copy-rights, customs, excise, etc. Section 92 says: On the imposition of uniform duties of customs, trade, commerce, and intercourse, among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free . Unlike the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trade, commerce, and intercourse among the States has been understood in the widest sense as including trade in all its manifestations involving transportation or movement across the frontiers of the State it also includes non-commercial intercourse. On the second question, some of the leading Australian decisions contain an interesting and instructive exposition of the conflict of jurisdiction and useful suggestions for resolving it. In this context the following decisions may usefully be consulted : James v. Cowan ([1930] 43 C.L.R. 386), Commonwealth of Australia v. Bank of New South Wales ,Hughes and Vale Proprietary Ltd. v. State of New South Wales ((1955] A.C. 241), Hughes and Vale Private Limited v. The State of New South Wales [No. 2] ([1956] 93 C.L.R. 127) Grannall v. Marrickville Margarine Proprietary Ltd. ([1955] 93 C.L.R. 155), Armstrong v. State of Victoria [No. 2] ([1957] 99 C.L.R. 28.), Commonwealth Freighters Proprietary Ltd. v. Sneddon ([1959] 102 C.L.R. 280. 546). The Australian decisions broadly laid down the following three propositions : (i) the impugned law, whether fiscal or otherwise, shall directly and immediately restrict traffic across the borders befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words in the said article, in their juxtaposition and interaction, furnish the key to the problem, and they are : (i) trade, commerce and intercourse, (ii) throughout the territory of India, and (iii) shall be free. The expression trade, commerce and intercourse is a composite one and has received, as already noticed, the fullest judicial attention from the highest courts of America and Australia : though they may not be words of art, they have acquired a secondary meaning or significance. I shall accept the meaning acquired by that expression by the gradual evolution of law in those countries. Now, let us analyse the words shall be free . Three questions occur to one's mind in regard to this, namely, (i) what is free ? (ii) free from what ? and (iii) where is it free ? As I have already indicated, the said composite expression means trade across the borders: what is free is that trade. It is implicit in the concept of freedom that there will be obstructions to it. Such obstructions or barriers may be, in the present context, to the freedom to trade across the borders. Article 301 provides for freedom from the said barriers or impediments in effect operating as barriers. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said to infringe the said freedom, it must be ascertained whether the impugned provision operates as a restriction impeding the free movement of trade or only as a regulation facilitating the same. Restrictions obstruct the freedom, whereas regulations promote it. Police regulations, though they may superficially appear to restrict the freedom of movement, in fact provide the necessary conditions for the free movement. Regulations such a provision for lighting, speed, good condition of vehicles, timings, rule of the road and similar others, really facilitate the freedom of movement rather than retard it. So too, licensing system with compensatory fees would not be restrictions but regulatory provisions ; for without it, the necessary lines of communication, such as roads, waterways and air-ways cannot effectively be maintained and the freedom declared may in practice turn out to be an empty one. So too, regulations providing for necessary services to enable the free movement of traffic, whether charged or not, cannot also be described as restrictions impeding the freedom. To say all these is not to say that every provision couched in the form of regulation but in effect and substa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Constitution only are subject to that freedom ; for firstly, the article does not restrict the freedom to the area covered by those entries, and, secondly, laws made under the other entries may more effectively and directly affect the movement of trade. If a law directly and immediately imposes a tax for general revenue purposes on the movement of trade, it would be violating the freedom. On the other hand, if the impact is indirect and remote, it would be unobjectionable. The Court will have to ascertain whether the impugned law in a given case affects directly the said movement or indirectly and remotely affects it. At this stage, an argument elaborated by Mr. Lalnarain Sinha may also be noticed. The learned Advocate said that the filed occupied by Art. 19 of Part III of the Constitution and that occupied by Part XIII thereof are distinct, that Art. 19 deals generally with freedom of trade and that Art. 301 with discriminatory barriers and that fiscal statutes could not be restrictions under Art. 19 and, therefore, they could not equally be restrictions under Art. 301. He would say that whatever might be said of regulatory taxes or ','destructive ones . fiscal taxes a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at unreasonable procedural restrictions imposed by law of taxation would infringe the freedom. It is also admitted that a fiscal law may offend the fundamental right enshrined in Art. 14 of the Constitution. If so, it is beyond my comprehension on what principle the law of taxation could offend with impunity the freedom enshrined in Art. 19 (1) (g). Article 13(2) says in express terms The State shall not make any law which takes away or abridges the rights conferred by this Part and any law made in contravention of this clause shall to the extent of the contravention, be void. A law of taxation is made by Parliament or the Legislature of a State, as the case may be, in exercise of the power conferred under the Constitution by virtue of the entries, found therein. It is a law just like any other law made under the Constitution. This Court, in K. Thathunni Moopil Nair v. State of Kerala ([1961] 3 S.C.R.77) and in Balaji v. I. T. Officer ([1962] 2 S.C.R. 983), hold that a law of taxation would be void if it infringed the fundamental right guaranteed under Art. 19 of the Constitution. Therefore, the law of taxation also should satisfy the two tests laid down in Art. 19(6) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain presumptions, such as that of the wisdom, knowledge and the good intentions of the Legislature, and does not also meticulously go in to the question, but only looks at the broad features. On the argument of learned counsel when it is permissible and possible for a court to ascertain whether a tax is fiscal or regulatory, I do not see how it becomes impossible, though it may be difficult, to hold whether a fiscal tax is reasonable or not. The distinction lies not in the nature of the enquiry but only in degree. That apart, no restriction, if it is unreasonable, can be more deleterious to the freedom than the imposition of fiscal burden on it, which may in certain circumstances destroy the very freedom. I, therefore, hold, on a true construction of the expressed words of Art. 19 of the Constitution, that it is not possible or even permissible to hold that laws of taxation are outside the scope of the freedom enshrined therein. As the premises of Mr. Lalnarain Sinha's argument lack a reasonable basis his further argument that the freedom in Art. 301 excludes from its scope fiscal laws must be rejected. Having ascertained the scope and content of the freedom envisaged in Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed upon this power by an attempt to confine it to the entries mentioned in Art. 303. Article 303, which prohibits the Parliament from making a law giving preference to one State over another or making any discrimination between one State and another, is confined only to the entries relating to trade and commerce. But Art. 303 is in the nature of an exception or proviso to Art. 302. The proviso leaves the generality of the substantive enactment unqualified except in so far as it concerns the particular subjects to which the proviso relates. Where the language of the main enactment is clear and unambiguous, a proviso can have no repercussion on the interpretation of the main enactment so as to exclude from it, by implication, what clearly falls within its expressed terms : see M. S. M. Railway v. Bezwada Municipality (A. I. R. 1944 P. C. 71, 73.). The words in Art. 302 are clear and unambiguous and they do not confine its operation to any particular entries and, therefore, the limitation imposed under Art. 303 cannot curtail the generality of the provisions of the said article. But the more difficult question is, what does the word ,restrictions mean in Art. 302? The d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... triction or not depends on the question whether the said law imposes directly and immediately a limitation on the freedom of movement of trade. If it does, the extent of the impediment relates to the question of degree rather than to the nature of it. If it is a restriction, it must satisfy the conditions laid down in Art. 302 of the Constitution. Article 303 is an exception or a proviso to Art. 302. Article 303 opens out with a non-obstante clause, namely, Notwithstanding anything in article 302 . This phrase is equivalent to saying that in spite of article 302 or that article 302 shall be no impediment to the operation of article 303 . It is accepted on all hands that there is a defect in the phraseology used in this article. This article prohibits both Parliament and the State Legislature from making a law giving preference to a State or States or making a discrimination among the States. The non-obstante clause has no relevance so far as the Legislature of a State is concerned, for Art. 302 does not deal with Legislature of a State. In these circumstances, the non-obstante clause can only be made applicable to that to which it is appropriate i.e., only to the limitations im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and commerce. If a law made under entry 26 of List If giving preference or making discrimination among the States is objectionable, it should also be objectionable, if made by virtue of any other entry. I would, therefore, hold that any law made by Parliament by virtue of any entry imposing the said discriminatory restrictions would be bad Under the said article. Article 303 (2) lifts the ban imposed on Parliament under Art. 303 (1), if a law made by Parliament imposing such discriminatory restrictions is necessary for the purpose of dealing with a situation arising out of scarcity of goods in any part of the territory of India. That part of Art. 303, which prohibits the Legislature of a State from making a law of the nature mentioned therein, also bears the same constructions and it is not necessary to restate it, except to mention that clause (2) of Art. 303 does not lift the ban in respect of the State Legislature. Coming to Art. 304, we are again confronted with a defect in phraseology. The article opens out again with a nonobstante clause, namely, Notwithstanding anything in article 301 or article 303 . Under Art. 301 (a), the Legislature of a State may by law impose on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plained, all subject to the proviso. Again, in the context of Art. 304 (b), a strong plea is made by some of the learned Advocates appearing for the States, relying upon the other provisions of the Constitution for holding that taxation laws are outside the ken of the said provisions. Reference is made to Arts. 31 (5) (b) (i), 248, 265, 276, 285, 287 and 288. I do not propose to consider the arguments based on the said articles in detail, as, in my view, these and similar articles of the Constitution do not even remotely touch the question raised before us. They fit in the scheme of the Constitution. The Constitution confers power on the Legislatures to make laws of taxation, circumscribes that power with reference to the entries in the Seventh Schedule and other constitutional provisions, and provides for resolving conflict of powers. The aforesaid articles, except Art. 31 (5) (b) (i) and Art. 248, appear in Ch. I of Part XII under the general heading Finance , Article 265 declares that no tax shall be levied or collected except by authority of law; that is to say, tax cannot be levied or collected by an executive flat. Article 276 fixes a ceiling on taxes payable to local boards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heading of this article is Freedom to manage religious affairs , but the subjectmatter of Art. 26 cannot be equated to that of the freedom of trade declared under Art. 301. I should not be understood to have expressed any view on the construction of that article in the present case. Article 305, as it stood before the Constitution (Fourth Amendment) Art. 1955, only saves the existing laws from the operation of Art. 301, and Art. 303, and it does not throw any light on the construction of Art. 301. Article 306 was omitted 'by the Constitution (Seventh Amendment) Act, 1956; but the said article saved the operation of any law made by any States specified in Part B in the First Schedule before the commencement of the Constitution levying any tax or duty on the import of any goods in to the State from other States or on the export of goods from the State to other States and enacted that if there be an agreement between the Government of India and the Government of that State in that behalf, the said tax or duty might be levied or collected for such period not exceeding ten years from the commencement of the Constitution, subject to the terms of the said agreement. If a law of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced on the provisions of the Constitution brings out the harmony between the various articles in Part XIII of the Constitution and also discloses an integrated scheme of freedom of trade,, commerce and intercourse maintaining a balance between federalism and provincial autonomy. I agree with my learned brother., Dan, J... that the provisions of the Rajasthan Motor Vehicles Taxation Act (XI of 1951) are regulatory in character and that they do not infringe the freedom enshrined in Art. 301 of the Constitution. The appeals fail and are dismissed with costs. HIDAYATULLAH, J.- The Rajasthan Motor Vehicles Taxation Act, 1951 (No. XI of 1951), in s. 4 provided: (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 actually notwithstanding that the motor vehicle may from time to time cease to be used. (2)An owner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19(1) (d), (f) and (g) of the Constitution; that it is ultra vires and illegal, as it contravenes the freedom guaranteed under Art. 301; that even if permissible, it is not a reasonable restriction of =and commerce within Art. 304, and that not having been enacted with the previous sanction of the President, it is not effective as law under Art. 265. At an earlier hearing, the attention of the Constitution Bench of this Court was drawn to Atiabari Tea Co. Ltd. v. State of Assam ([1961] 1 S.C.R. 809), where this Court struck down by majority the Assam Taxation (on Goods Carried by Roads or Inland Waterways) Act, 1954, as offending against the freedom of trade, commerce and intercourse. On that occasion, three views were expressed. Sinha, C. J.. held that the freedom guaranteed by Art. 301 was against trade barriers, tariff walls, or imposts which have a deleterious effect on the free flow of trade, commerce and intercourse but not against taxation Simpliciter. Shah, J., held that the freedom envisaged was wide enough to comprehend within itself a ban of prohibition, control or impediment of any kind whatever and of taxes whether they fell on movement of trade or commerce or oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of justice when a question arises whether the prescribed limits (1) (1878) 3 App.cas.889. have been exceeded, must of necessity determine that question; and the only way in which they can properly do so, is by looking to the terms of the instrument by which, affirmatively, the legislative powers were created, and by which, negatively, they are restricted. If what has been done is legislation within the general scope of the affirmative words which give the power, and if it violates no express condition or restriction by which that power is limited it is not for any Court of Justice to inquire further, or two enlarge constructively those conditions or restrictions. We have thus to see what powers have affirmatively been conferred on the legislatures of the State and what are the restrictions on that power. In this connection, we must also bear in mind the weighty observations of Gwyer, C. J., in Bhola Prasad v. The King Emperor ( [1942] F.C.R. 17, 27) We must again refer to the fundamental proposition enunciated in The Queen. v. Burah((1878) 3 App. cas. 889) that Indian Legislatures within their own sphere have plenary powers of legislation as large and of the same nature as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he exercise of this power there are to be found other curbs in other parts of the Constitution, and whether those curbs have not been observed. Such curbs may be of three kinds. The first may arise from the operation of the power of legislation granted to Parliament by Entry 42 of the Union List, and the contention in this connection is that the present impugned Act in its pith and substance is legislation under that Entry and thus void. The second may arise from Art. 19, sub-cls. (d), (f) and (g) if the law deprives the motor operators of the right (a) to move freely throughout the territory of India' (b) to acquire, hold and dispose of property, and (c) to practice any profession, or to carry on any occupation, trade or business, and the restriction is incapable of being justified as reasonable. The third may arise from the provisions of Part XIII where freedom of trade, commerce and intercourse throughout the territory of India has been ,guaranteed', subject only to the provisions of that Part. These, in the main, are also the contentions. and these appeals can be effectively disposed of from these three view points. The first contention that the impugned Act is bad b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Constitution. That Article guarantees to the citizens of India certain basic freedoms. Freedom from taxation is not one of them. It is hardly necessary in this case to examine the subject from the angle of Art. 19, because a law to be good under that Article must satisfy the test of reasonableness. If the impugned sections here are declared to be unreasonable restrictions upon the freedom of trade, commerce and intercourse, they would fall also under Part XIII. If this were to happen, it would be wholly unnecessary to decide whether taxation laws are within the reach of Art. 19 and also whether the impugned provisions have to pass the independent scrutiny of Art. 19 before they can be sustained. This brings us to the consideration of the last point on which arguments occupied the Court for several days. It would be necessary (if not, impossible) to try to discuss the arguments which, though proceeding from the same side, were often conflicting. The use of language borrowed from a. 92 of the Australian Constitution in Art. 301 of our Constitution led to the citation of many Australian rulings. Those rulings are so numerous that they provoked a former Chief Justice of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt of Australia. The provisions of the Australian Constitution themselves enact the underlying agreements. Sections 51, 88, 89, 90, 100 and 102 insist upon uniformity and the absence of discrimination in matters of trade and commerce after the imposition of uniform duties of customs which was to be achieved in two years. Section 92 then epitomizes the whole concept of this unity and freedom from preferential treatment by enacting : On the imposition of uniform duties of customs, trade, commerce and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free. It may be pointed out here that the alternative phrase throughout the Commonwealth was not accepted, though it was suggested as an amendment more than once. The provisions of the Australian Constitution such as bear on trade and commerce, are no more than covenants entered into at the Conventions, which have been introduced bodily into the Australian Constitution, the fate of which depended for a long time on how to secure an agreement about uniform tariffs customs, excises and bounties. The declaration of freedom of trade, commerce and intercourse was the logica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this labyrinth there is no golden thread (p. 310). The maze of law round s. 92 was, of course, something of which the framers of our Constitution were not unaware. They knew that in spite of the force of the words absolutely free , it was well-settled that the freedom so contemplated was a qualified freedom. In Duncan v. State of Queensland ((1916) 22 C. L. R. 536, 573) Griffith, C. J., had observed, what was generally accepted, that the word free' does not mean extra legem, any more than freedom means anarchy . The task of the Bench as also the Bar was to ascertain the limits of freedom or more appropriately, the limits to which restrictions could go. In this, the Australian High Court was the actor in the main ; but the Privy Council also delivered four judgments. Of these, two were before our draft Constitution and two, thereafter. It is, therefore necessary to investigate, to find out what was the accepted position in about 1948 to be able to see if any of the principles so laid down were accepted and to what extent they were modified to suit our Constitution in the light of our own history. We shall first notice those cases which were decided before our Constitutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) Free of all laws the pith and substance of which is a regulation of interstate trade or commerce; (5)Freedom attaches to trade and commerce regarded as a whole and not distributively. Individuals are not guaranteed freedom in relation to their trade and commerce so long as trade and commerce as a whole are not impaired. (6)Free from pecuniary imposts-that is the narrowest meaning of s. 92. These six propositions fairly represent the view in the various judgments of the Australian High Court. Isaacs, J., in Rex v. Smithers ([1912] 16 C. L. R.99) had observed : In my opinion, the guarantee of inter-State freedom of transit and access for persons and property under a. 92 is absolute-that is, it is an absolute prohibition on the Commonwealth and States alike to regard State borders as in themselves possible barriers to intercourse between Australians. In McArthur'a Case ([1920] 28 C. L. R. 533), the claim was made against all Governmental control and the majority also held that to be its meaning. The Privy Council examined the scheme of the Constitution of Australia and drew the line thus : The true criterion seems to be that what is meant is freedom as at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 Ex. D FOR) and Commissioners of Taxation v. Kirk ([1900] A.C. 588 592), where Lord Davey observed: The word trade' no doubt primarily means traffic by way of sale or exchange or commercial dealing, but also added that it may have a large meaning. The view of Knox, C.J., was expressly disapproved by a Privy Council in James v. Commonwealth of Australia ([1936] A.C 578) involving, as it did, a conception of inter-State trade, commerce and intercourse commencing at whatever stage in the State of origin, and continuing until the moment in the other State when the operation of inter-State trade could be said to end, the freedom attaching to every stop in the transaction from beginning to end. It was said that such a view would lead to an immunity from law of a whole body of acts or dealings by the mere fact that they are parts of an interState transaction. The concept of trade and commerce was thus limited to that movement to which crosses a State barrier. As regards intercourse also, the earlier meaning was wide. The question was whether such ,,intercourse must be commercial . It was held in earlier cases that this conferred a personal right on an Australian an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the incidental effect on the trade and commerce was immaterial. The action of the Minister was declared ultra vires, and James was held entitled to succeed in his claim for damages. The legislation by the State having been declared invalid, the Commonwealth made the Dried Fruits Act (1928-35). Under that law, no person could send dried fruit from one State to another unless he exported his quota outside Australia. This was challenged by James. When the case reached the Privy Council, three points were Considered by the Privy Council and decided. The first was that. 92 bound also the Commonwealth, the second was that it created a ban against prohibitions or burdens at the frontier, and lastly, that it protected commerce in motion and passing the frontiers of the States. A large number of cases were noticed in which it was decided that trade and commerce was validly burdened in the exercise of power to make laws without impairing movement of trade at the borders. These laws dealt with various subjects like monopolies, price fixation, health regulations, licensing systems, entry of goods or persons and transport. The last group consisted of cases in which restrictions applying to m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Commonwealth ((1945) 71 C. L. R. 29). Under the Airlines Act, 1945, authority was given to establish Statemanaged services to the exclusion of existing commercial lines whose business was to terminate, whenever a line, was effectively started by the Government Airlines Commission. The validity of the entire Act was challenged by private operators who stood excluded from field, on the ground of an infringement of s. 92 of the Commonwealth of Australia Act. The establishment of the Airlines Commission was upheld, but the creation of monopoly was held to be invalid. Latham, C.J observed: I venture to repeat what I said in the former case (Milk Board case) ((1939) 62 C. L. R. 116, 127): 'One proposition which I regard as established is hat simple legislative prohibition (Federal or State), as distinct from regulation, of inter State trade and commerce is invalid. Further a law which is directed against' inter-State trade and commerce is invalid. Such a law does not regulate such trade, it merely prevents it. But a law prescribing rules is to the manner in which trade (including transport) is to be conducted is not a mere prohibition and may be valid in its application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (5) The freedom was assured not only to tangibles but also to intangibles, and the words of the section by means of internal carriage or ocean navigation in s. 92 could not be hold to mean only tangibles. Starke, J., himself said that these words 'trade, commerce and intercourse were wide enough to include intangibles and took the aid of some American decisions which had held that insurance was within the Commerce power. (6) Though the freedom was at the frontiers of the States but any restraint put upon trade, commerce and intercourse even before some tangible property leaves the State of origin was also contemplated. (7) Dixon, J's dictum in O' Gilpin's case((1935) 52 C. L. R. 189) where he observed It is not, therefore every regulation of commerce or of movement that involves a restriction or burden constituting an impairment of freedom. Traffic regulations affecting the lighting and speed of vehicles, tolls for the use of a bridge, prohibition of fraudulent descriptions upon s goods, and provisions for the safe carriage of dangerous things, supply examples of regulatory provisions not strictly restrictions within s. 92. According to State, J., al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s The Regulation of Trade and Commerce in the exclusive power of Parliament. Section 121 then provides: All Article of the Growth, Produce or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces. Several important decisions were rendered by the Privy Council and to some of theme we find it necessary to refer. In Citizens Insurance Co. v. Parssons ((1881) 7 App. Cas. 96.) and. again in Bank of Toronto v. Lamb (3) the Privy Council found it necessary to limit the general words of No. 2 of s. 91 'to afford scope for powers given exclusively to the Provincial Legislatures'. In City of Montreal v. Montreal Street Railway ((1912) A. C. 333, 344), the same was observed again. Lord Halsbury, L. C., in Attorney-General for Onterio v. Attorney General for the Dominion ([1896] A. C. 348) said that the words must be given 'a statutory meaning'. There is, however no definite statement of the limits to be placed but generally the exercise of regulation of trade and commerce within the Provinces is upheld under No. 16 of s. 92, which gives the following power to the Provinces: Generally all matters of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tates, and with the India Tribes. In 1824, in the well-known case of Gibbone Ogden ((1824) 9 Wheat 16 L. ed. 23), this clause was considered. Marshall, C.J gave the definition of commerce : Commerce, undoubtedly, is traffic, but it is something more; it is intercourse. I describes the commercial intercourse between nations and parts of nations, in all it branches, and is regulated by prescribing rule for carrying on that intercourse. The principle of federation as understood in the United States is that sovereign States have surrendered a part of their power to the United states and barring what has been surrendered and what is prohibited by the constitution of the States, the residue belongs to the United States. This is brought, out in the Tenth Amendment: The powers not delegated to the United States by the Constitution nor prohibited by it to the States, are reserved to the States respectively, or to the people. Most of the cases in the American Reports are concerned with what rights belong to the States and how far the Congress can regulate commerce. That is not a subject with which we are concerned in the present enquiry. We now come to the Indian scene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hastings, the Governor-General was also authorised by the Charter Act of 1833 to overrule his Council, a power which he continued to exercise down to 1935. There was thus, in truth and reality, only one Government and the so-called Governments of the Presidencies and Provinces were agents of the Central Government. After 1858, the Government of the country was carried on in the name of the Queen through her Secretary of State for India. The general pattern was, however, the same, though as time passed, democratic institutions in Government slowly emerged. When the Reforms came in 1919 and introduced a system of local governments, the process was not decentralisation but reconcentration, as is known in France. By stages, the Councils at the Centre and in the Provinces were greatly expanded, a large number of nominated members being added. When elections came, they included the representation of some special interests. Legislation was even then from the Centre in the shape of Regulations or under instructions from the Centre, unless it was of a wholly local character. We shall. pass over the details of the preparatory periods. When Parliament began to modify all this, the aim was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue -a phrase used for years afterwards. The Montagu-Chelmsford Report was the next important landmark and led to proper provincial enfranchisement. The Report said: The existing financial relations between the Central and Provincial Governments must be changed if the popular principle in Government is to have fair play in the Provinces. Our first aim has therefore been to find some means of entirely separating the resources of the Central and Provincial Governments. Under the Government of India Act, the Devolution Rules (Rules 2 and 14) made the separation of the resources. From this, it is not to be gathered that the Provinces had a separate fisc. By R. 16, it was provided that all moneys were to be paid into an account in the custody of the Governor-General and he made rules with the sanction of the Secretary of State and issued orders, both general and special, for payments, withdrawals or disbursements from that account. By far the greater part of the Devolution Rules dealt with these matters and, in addition, there were congeries of rules and instructions. Taxation in the Provinces was under Entry 48 in Part II of the First Schedule of the Devolution Rules, which re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Commission (popularly known as the Simon Commission) was appointed. The Commission recommended that the Organic Instrument to be framed should have provisions for its own development; in other words, that India should have act flexible and not a rigid Constitution, and that any development should have regard to India as a whole and not merely British India. In this, there was the echo of what the Montagu-Chelmsford Report said: Our conception of the eventual future of India is a sisterhood of States, selfgoverning in all matters of purely local or provincial interest In this picture there is a place for the Native States. The Commission emphasised one fact more than any other. They observed: Economic forces are such that the States and British India must stand or fall together. The increasing importance of industry brings problems that must be faced by both together The States themselves have their own tariff policies, and there is a serious possibility that, unless provision can be made for the reconciliation of divergent interests, numbers of tariff walls will be perpetuated in an area where fiscal unity is most desirable. The Commission also suggested that- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment to the Provinces, and in encouraging them to develop a vigorous and independent political life of their own, we have been running the inevitable risk of weakening or even destroying that unity. Provincial Autonomy is, in fact, an inconceivable policy unless it is accompanied by such an adaptation of the structure of the Central Legislature as will bind these autonomous units together . They also pointed out that the unity of India on which they had laid so much emphasis was dangerously imperfect so long as the Indian States had no constitutional relationship with British India. The Committee recognised the difficulties of economic ties between the Provinces inter se and also British India as a whole on the one hand, and the Indian States on the other, and observed : On the one band, with certain exceptions, the States are free themselves to impose internal customs policies, which Cannot but obstruct the flow of trade. Even at the maritime ports situated in the States, the administration of the tariffs is imperfectly coordinated with that of the British Indian ports, while the separate rights of the States in these respects are safeguarded by long standing treaties or usa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mittee, therefore, suggested that the Governor-General and the Governors should be empowered to withhold their assent to Bills which were discriminatory in fact or bad that tendency. They also recommended statutory prohibition against certain specified kinds of discrimination, and added : We need hardly add that the effect of our recommendation for the statutory prohibition of certain specified forms of discrimination would lay open to challenge in the Courts as being ultra vires any legislative enactment which is inconsistent with these prohibitions, even if the Governor-General or Governor has assented to it. With these suggestions in respect of the freedom of Grade and commerce, a Federal Constitution was recommended. It was also recognised that it would be the Provinces which would carry on the ,national building activities' and the need for more finances 'or the Provinces was acutely recognised. The establishment of self-governing units and self-governing constitutions, the creation of deficit Provinces, the corporation of Burma and the cost of establishment of a Federation, were matters which were gone into by the Federal Finance Committee. The Federal Structu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to pass any law or take any executive action prohibiting or restricting the entry into or export from, the Province of goods of any class or description : (b) by virtue of anything in this Act have power to impose any tax, cess, toll, or due which, as between goods manufactured or produced in the Provinces and similar goods not so manufactured or produced, discriminates in favour of the former, or, which, in the case of goods manufactured or produced outside the Provinces, discriminates between goods manufactured or produced in one locality and similar goods manufactured or produced in another locality. (2) Any law passed in contravention of this section shall, to the extent of the contravention, be invalid By this section, power was denied to the Provincial Legislatures under two Entries in the Provincial List to impair free entry and export of goods in the Provinces. The two Entries were referred to separately and expressly by their content and were 27. Trade and Commerce within the Province and 29. Production, supply and distribution of goods. The word ,'commodities was used instead of goods in the White Paper, and the change to goods appears to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have viewed the relative provisions, must have attempted to evolve a pattern of such freedom suitable to Indian conditions. The Constituent Assembly realised that the provisions of s. 297 and the Chapter on Discriminations in the Government of India Act, 1935, hardly met the case, and were inadequate. They had to decide the following questions : (a) whether to give the commerce power only Parliament or to divide it between Parliament and the State Legislatures ; (b) whether to ensure freedom of trade, commerce and intercourse interState, that is to say, at the borders of the States or to ensure it even intra-States ; (c) whether to make the prohibition against restrictions absolute or qualified, and if so, in what manner ; (d) if qualified by whom was the restriction to be imposed and to what extent; (e) whether the freedom should be to the individual or also to trade and commerce as a whole ; (f) what to do with the existing laws in British India and more so, in the acceding Indian States ; (g) whether any special provisions were needed for emergencies; (h) what should be the special provisions to enable the States to levy taxes on sale of goods, which taxes were to be the main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw 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. (In its application to the State of Jammu and Kashmir, in cl. (1) of art. 303, the words by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule shall be omitted). 304. Notwithstanding anything in Art. 301, or Art. 303, the Legislature of a State may by law (a) impose on goods imported from other States (or the Union territories) 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 good 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 the purposes of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President. Ins. by the Constitution (Seventh Amendment) Act, 1956, s. 29 and Sch.) 305. Nothing in articles 301 and 303 shall affect the provisions of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Concurrent List, which bear directly upon trade and commerce. Union List 41. Trade and commerce with foreign, countries, import and export across custom s frontiers; 42. Inter-State trade and commerce. State List : 26. Trade and Commerce within the State subject to the provisions of entry 33 of List III. 27. Production, supply and distribution of goods subject to the provisions of entry 33 of List III. Concurrenl List 33. (Trade and Commerce in, and the production, supply and distribution of : (a) the products of any industry where the control of such industry by the Union is declared by Parliamentary law to be expedient in the public interest) and imported goods of the same kind as such products ; (b) food-stuffs, including edible oilseeds and oils; (c) cattle fodder, including oilcakes and other concentrates; (d) raw cotton, whether ginned or unpinned and cotton seed or (e) raw jute. The words in brackets show the entry as it was prior to its amendment by the Constitution (Third Amendment) Act, 1954. The word industries' occurred in place of the word industry' there. By dividing the commerce power and by enacting the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ext Article clearly show. Article 302 then makes the first exception to the freedom. That, Article gives power to Parliament to put restrictions on this freedom. This shows clearly that Parliament is bound by Art. 301. Disputes similar to those which took place in Australia in which it was hotly debated whether the Commonwealth was bound or not have thus been avoided. By providing separate releases from Art. 301 for Parliament and the State Legislatures, that controversy can never arise. Parliament which is authorised by Art. 302 can impose restrictions on trade, commerce and intercourse in two aspects. They are : (a) between one State and another; or (b) within any part of the territory of India. By the first is meant trade and commerce in motion across the frontiers of States. It means the inter-State character of trade, commerce and intercourse. By the second, the power is made more general. Parliament may put restriction in any part' of the territory of India. The territory of India is defined by Art. 1(3), which says : (3) The territory of India shall comprise(a) the territories of States; (b) the Union territories specified in the First Schedule ; (Befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erce in any of the Lists in the Seventh Schedule. The main idea underlying this Article is to ban preference and discrimination between one State and another in matters of trade, commerce and intercourse. This principle of uniformity is is high that by the non-obstante clause the powers of Parliament under Art. 302 are completely nullified and along with the powers of Parliament, all derivative powers of the State Legislatures where Parliament declares by law that a restriction is in the public interest and the State Legislature (legislates under the shelter of such a declaration, are also nullified, see Entry 33(a). Entry 35 of the Concurrent List or Entry 57 of List If read with Entry 35 of List 111, to confine the citation to Entries, with which we are primarily concerned here. In the Seventh Schedule to the Constitution in addition to Entries 41 and 42 (List 1), 26 and 27 (List II) and 33 (List III) there are many other Entries regulating special trades. In some of them, the formula by law made by Parliament' is again repeated out of abundant caution. By the words of Art. 303 'by virtue of any entry relating to trade and commerce' is meant not the five Entries last ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The question of famine is primarily in mind. and secondarily the readjustment or even distribution of goods due to some economic imbalance. Clause (2) is self-explanatory, and questions such as fixing of quotas of dried fruits or their even distribution in home and outside markets which agitated the Australians can hardly rise, and similar questions can adequately be dealt with by Parliament under this power. Next comes Art. 304. It beings with the non-obstante clause Notwithstanding anything in article 301 or article 303. It is contended that one can understand the mention of Art. 301 but not of Art. 303, and the Article is thus said to be inaccurately drafted. We have already shown why in Art. 303 the State Legislatures found a mention, and unless Art. 303 was also put aside in Art. 304, there would arise a question of balancing it against Art. 304. To avoid this, both Arts. 301 and 303 have been excluded from con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prohibition of certain specified forms of discrimination would lay open to challenge in the Courts as being ultra vires any legislative enactment which is inconsistent with these prohibitions, even if the Governor-General or the Governor has assented to it. The same will operate even if the President gives his sanction. Article 305 saved existing laws to start with, and at the time of the passing of the Constitution (Fourth Amendment) Act, 1955, room was made for the operation of laws by which a State or a corporation owned or controlled by the State carries on any trade, business, industry or service whether as a monopoly or otherwise. Article 305 does not apply to the statute here impugned as it was not an ,existing law'. Article 306 was a transitory provision which enabled certain Part B States to Continue levy of existing taxes or to restrict trade, commerce and intercourse for a period, notwithstanding the provisions of Part XIII. With that, we are not concerned after 1955 due to the repeal of that Article. Article 307 also is immaterial in this case. It provides for the appointment of an authority for carrying out the purposes of Arts. 301-304, and is a counterpar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard as established is that simple legislative prohibition (Federal or State), as distinct from regulation, of interState trade and commerce is invalid. Further law which is directed against inter-State trade and commerce is invalid. Such a law does not regulate such trade, it merely prevents it. But a law prescribing rules at to the manner in which trade (including transport) is to be conducted is not a mere prohibition and may be valid in its application to inter-State trade, notwithstanding s. 92'. , observing: With this statement, which both repeats the general proposition and precisely states that simple prohibition is not regulation, their Lordships agree. The Privy Council also made it clear that in some cases 'regulation may take the form of prohibition, thus endorsing the statement of Harrison Moore that the power of legislation, is not merely a power to regulate; it ranges from creation to destruction, it may establish as well as prohibit: The Commonwealth of Australia, 2nd Edn., p. 280. The Advocates-General of Bombay and the Punjab and Mr. G. S. Pathak relied upon many decisions of the Australian High Court after the Banks' case. (1) Strict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mined a little closely. All the earliest Transport cases were decided after the decision of the Privy Council in James v. Cowan ((1932) A.C. 542) but before James v. The Commonwealth ((1936) A.C. 579) was decided. The Riverina case ((1937) 57 C.L.R. 327) and the Austrailan National Airways case ((1945) 71 C.L.R. 29.) preceded the Banks' case and McCarter v. Brodie ((1955) A. C. 241.) followed it, and then came Hughes and Vale Pty. Ltd. v. State of N.S.W. ((1955) A. C. 241.) from which the appeal went to the Privy Council. Leave to appeal in McCarter v. Brodie [1950] 8 0C.L.R.432) was refused. Before we examine the decision of the Privy Council, lot us recall and re-state the main events in brief. In James v. South Australia ((1927) 40 C.L.R. 1), what was struck down by the High Court as. a contravention of s. 92 was the executive determination of where and in what quantities dried fruit were to be marketed. In James v. Cowan ((1932) A. C 542), the action of the Minister expropriating the surplus dried fruits was also held to be a contravention. In James v. The Commonwealth ((1936) A. C. 578), it was held that s. 92 bound not only the States but also the Commonwealth. The last c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anks' case ((1948) 76 C.L.R. 1, 380, 38 1) had proved wrong three propositions, and they were : (1) that s. 92 did not guarantee freedom of the individual; (2) that' if the same volume of trade flowed from State to State before as after the interference with individual trader then the freedom of trade among the States remained unimpaired.' (3) that because a law applied alike to inter-State commerce and to domestic commerce of a State, it might escape objection notwithstanding that it prohibited, restricted or burdened inter-State commerce. Next, according to him two further points were settled by the Bank's case: ([1948] 76 C.L.R. 1. 380,381). (1) That the object or purpose of an Act, challenged as contrary to s. 92 was to be ascertained from what was enacted and consisted in the necessary legal effect of the law itself and not in its ulterior effect socially or economically and (2) that the doctrine of 'pith and sub stance though of help to find out whether it Wag nothing but a regulation of a class of transactions forming part of a trade and commerce was beside the point when the law amounted to a prohibition or the question of regulation c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case reached the Privy Council, it was contended that where the tax was on the movement itself, the tax could not be regarded as regulatory and the reasons in the judgments of Dixon, C.J., and Fullagar, J., were urged. This was accepted by the Privy Council. On the other side, it was contended that the provisions which were State-wide were regulatory and were imposed on all vehicles, and the effect on inter-State trade or commerce was indirect or consequential. This was not accepted. Even the other side conceded that : the imposition of charges in respect of vehicles used on inter-State journeys would infringe section 92 if the charges (a) discriminated against inter-State road transport or vehicles engaged therein; (b) were imposed at such a rate as to be prohibitive of inter-State road transport, whether alone or in common with all road transport . The Privy Council pointed out that in the Transport cases, ([1938] 57 C.L.R. 327) sufficient weight was not given to James v. Cowan ([1932]A.C. 542), where determinations of executive in its discretion were said to be invalid. It accepted the six propositions of Dixon, J., and followed the unusual practice of quoting in extens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e found by distinguishing between the features of the activity in virtue of which it fell within the category of trade, commerce and intercourse among the States and those features which, though invariably found to occur in some form or another in the activity, were not essential to the conception. It was pointed out also that under the guise of what may legitimately be regulation, real burdens and restrictions could be placed. There was a divergence of opinion again over the question of licence charges and registration fees. The majority was prepared to sustain charges if imposed as a real attempt to fix a reasonable recompense or compensation for the use of the highway and for a contribution to the wear and tear which the vehicle may be expected to make. The minority thought that (except for a fee for a specific service) no charges could be levied. In two cases viz., Nilson v. The State of South Australia ()[1955]93C.L.R 292.) and Pioneer Tourist Coaches Pty. Ltd. v. The State of South Australia ((1955] 93 C.L.R. 307), it was held that a State could not require commercial motor vehicles to register and pay a fee exceeding mere administrative charges. There is yet anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ullagar, J., in McCarter v. Brodie ((1936) A.C. 578), the law for the time being seems settled. Having dealt with the historical background of the Constitution, the possible models which were considered in the drafting of Part XIIL we proceed to consider the three views expressed in the Atiabari Tea Company case ([1950] 80 C. L.R. 432.). These views are not sharply divided. The majority accepts the view expressed by the learned Chief Justice, but goes beyond it, while Shah, J., accepts the views of the majority but goes still further. The main question that arose then, as it has arisen here, is : Do taxation laws come within the reach of Art. 301 ? Now, it cannot be laid down as a general proposition that all taxes are hit by that Article. We have shown above that the financial independence of the States was secured by an elaborate division of heads of taxation, which were. well-thought out to provide the States with the means of independent existence and the wherewithal of nation-building activities. There is hardly any tax which the States are authorised to collect which could not be said to fall on traders. Property tax, sales tax, municipal taxes, electricity taxes (to menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the concept of a Federation, which allows freedom of action to the States, subject, however, to the needs of the unity of India. Just as unity cannot be allowed to be frittered away by insular action, the existence of separate States is not to be sacrificed by a fusion beyond what the Constitution envisages. No doubt, Part XIII ensures economic unity to India and combines the federating States into the larger State called India. The Constitution also permits independent powers of taxation. What the Constitution does not permit is that trade, commerce and intercourse should be rendered 'unfree'. Trade and commerce remain free even when general taxes are paid by tradesmen in common with nontradesmen. The Question whether a tax offends Part XIII can only arise when it seeks to tax trade, commerce and intercourse. Support for the contrary proposition is not to be found in James v. The Commonwealth The Privy Council in James v. The Commonwealth did not lay down: Every step in the series of operations which constitutes the particular transaction is an act of trade, and control under the State law of any of these steps must be an interference with its freedom as trade. (p. 629) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... XIII. The power of taxation is, therefore, said to be not subject to the declaration of freedom in Art. 301. The imposition of a tax is conditioned on the existence of a law. Article 265 lays down that no tax shall be levied or collected except by authority of law . Article 301 is a curb on the law-making power, because by the unambiguous declaration contained in it, the freedom of trade, commerce and intercourse is secured. The prohibition is addressed not only to the EXecutive but also to the Legislature, because Arts. 302 and 304 lift the ban which has been imposed in favour of action by law made by Parliament and the State Legislatures respectively. Article 304 expressly mentions the power to impose taxes which must include at least excise duties and sales tax, and from this, also, it is quite clear that taxation is within the prohibition contained in Part XII. This argument was also rejected by the majority in Atiabari Tea Company case ((1961) 1. S.C.R. PC(1)), and we respectfully agree. Before, however, a tax can be struck down, the incidence of the tax and the method of its collection must be examined. If the tax falls upon trade, commerce and intercourse as such, irresp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may flow freely. The rule of the road is not a restriction of commercial traffic, but is one designed to make the flow of traffic smooth. The prescription that cars should have reliable brakes or lights or a sound device are not restrictions of trade. These regulations are needed both for ensuring safety for those engaged in traffic as also for securing that every one engaged in traffic might equally enjoy that right. The classification of heavy transport vehicles, the tare weight, the kinds of tares they must have, the seating capacity of buses and go on and so forth are not normally restrictions of trade, commerce and intercourse but are meant for the better and more effective flow of trade, commerce and intercourse. Such laws can not be viewed as restrictions at all, and do not come within the freedom angle, nor do they require the process under which freedom can be curtailed. Just as a tax of a general character payable by all and sundry and not placed upon a trade directly and immediately cannot be considered as a restriction of trade even though it burdens a trader, so also regulations of trade without hampering it or impairing its freedom cannot be described as restrictions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d commerce incidentally but without impairing the freedom. Sometimes, however, the regulation it self may amount to a restriction, and if such a stage is reached, then under our Constitution there striation must be reasonably in the public interest, and the President's prior sanction must be obtained, if the law imposing such restriction is made by the State Legislature. If, however, it does not reach the stage of restriction of trade and remains only a regulation incidentally touching trade and commerce, the regulation is outside the operation of Arts. 301 and 304. It is on this ground that laws prescribing the rule of the road and like provisions already referred to as well as a regulation that the height to which trucks may be loaded must be such as not to endanger the overhead bridges or wires, do not have to go before the President, since they do hot affect the freedom guaranteed. The object of such laws cannot be regarded as a restriction of trade and commerce. Freedom in Art. 301 does not mean anarchy. Similarly, a demand for a tax from traders in common with others is not a restriction of their right to carry on trade and commerce. A system of 'licensing of motor ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subjects indicated in the headings. A. Vehicles (other than Transport Vehicles plying for hire or required) if fitted solely with pneumatic tyres. B. If the above motor vehicles are fitted with resilient or non-resilient tyres, extra tax will be levied at 5% of the above rate. Part A is then divided into three sections dealing with different classes of vehicles and prescribe different rates for each such class. We are not at present concerned with vehicles which are not used as transport vehicles plying for hire. Schedule II is also divided into two parts dealing respectively with vehicles fitted with pneumatic tyres and vehicles not so fitted. The first part deals with two categories marked respectively A and B . , A comprises motor vehicles plying for hire for the conveyance of passengers and light personal luggage of passengers, while B cornprises goods vehicles plying under Public Carrier's Permit. There are further sub-divisions in each category A and B according to the seating capacity of the vehicles on the basis of which different rates of tax are imposed, but it is not necessary to go into their details. Schedule III comprises goods vehicles registere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re in the shape of taxes, which they had to bear in Rajasthan. Formerly, there was an agreement between the Ajmer State and. Kishengarh State, by which either State did not charge any tax or fees on vehicle registered in the respective States. Later, Kishengarh became a part of Rajasthan, and the tax was demanded from these appellants for the period, April 1, 1951, to March 31, 1954. The demand was made by virtue of s. 4, the charging section, under pain of the application of s. 1 1, which provides of penalties. The taxes, which are imposed by Schs. II, III and IV(1), operate on trade and commerce directly. It is not denied that the carriage of passengers and goods amounts to trade. It was, in fact, so help in the Transport cases in Australia and also by the Privy Council. Under the Act, this trade can only be carried on, if the tax is paid. The Act, therefore, involves a prohibition against a trade, which prohibition is released on payment of tax. The Schedules affect motor vehicles for carriage of passengers and goods on hire in Rajasthan and also similar vehicles coming from outside. In so far as vehicles coming from outside are concerned, their entry into the State is barred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charge on trade. The question thus remains: does the tax burden trade or impair the free, flow of trade and commerce as contemplated Art: 301? It is clear that the tax is on trade. It is also clear that it is on the movement of trade. It is further clear that it creates a barrier between one State and another, which trade cannot cross except on a heavy payment. The tax is not truly a fair recompense for wear and tear of roads even if a justification on the doctrine of compensatory taxes is applied. It is nothing except a restriction, which Art. 301 forbids. The Bill which became the Act, was not submitted to the President for his Previous sanction, nor was it assented to subsequently after it passed the Legislature. The question, therefore, whether the restriction imposed by the Act is reasonable or not,, does not arise. We are, therefore, of opinion that s. 4(1) as read with Schs. IT, III and Part 1 of Sch. IV offends Art. 301 of the Constitution, and as resort to the procedure prescribed by Art. 301(b) was not taken, it is ultra vires the Constitution. We wish to make it clear that we pronounce no opinion about the constitutional validity of s. 4(1) as read with Sch. 1 or the se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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