Part XIII - Trade & Commerce • Article

Article 304 Simplified: Restrictions on trade, commerce and intercourse among States

Article 304 (Restrictions on trade, commerce and intercourse among States) governs government property, assets, contracts, and suits. It details how the government enters into contracts legally, who owns unclaimed properties (escheat), and how the government can sue or be sued in court.

Official Text

Notwithstanding anything in article 301 or article 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 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.

Simple Meaning

Explain Like Ten

State governments can charge taxes on things coming from other states, but only if they charge the same tax on things made in their own state. They can also make health or safety rules that stop trade, but they must ask the President of India for permission first.

Student Mode

Article 304 outlines the regulatory and taxing powers of state legislatures under Part XIII. Under clause (a), states may levy non-discriminatory taxes on goods imported from other states/UTs, provided they are equivalent to taxes on locally produced goods. Under clause (b), states may impose reasonable restrictions in the public interest, subject to the proviso requiring the prior sanction of the President of India before a bill is introduced in the state legislature.

Example

For a real constitutional problem about restrictions on trade, commerce and intercourse among states, Article 304 gives the starting rule and connects it to the wider system of trade and economic movement.

Key Takeaway

Article 304 anchors restrictions on trade, commerce and intercourse among states within India's constitutional system.

FAQs

Can a state tax goods from other states at a higher rate to protect local industries?

No. Article 304(a) strictly prohibits discriminatory taxation; taxes on imported goods must be equal to those imposed on locally manufactured goods.

What is the requirement for a state to restrict trade under Article 304(b)?

Any bill or amendment to impose trade restrictions in the public interest must receive the previous sanction of the President of India before it is introduced or moved in the State Legislature.

Quiz

Under Article 304(a), a state can tax goods imported from other states if:

Answer: The tax is identical to that on locally produced goods (non-discriminatory)

Whose prior sanction is required to introduce a bill imposing reasonable restrictions on trade under Article 304(b)?

Answer: President of India