Free Trade and Taxing Power of the States Under the Constitution of India

Abstract

Constitution of India guarantees freedom of Trade and Commerce through out the territory of India. Given the federal structure of the country, in which different states trying to protect their interest, free trade and commerce has been neglected or given less attention to. It is not uncommon for the states to impose tax for giving to its territory. Do such taxes violate the constitutional mandate to free trade and commerce through out the territory of India? They are not if it can be shown that the tax is compensatory in nature, in the sense that it is only a charge/fee for the facilities accorded by the state to facilitate trade and commerce. The paper attempts to analyze different judgments of the Supreme Court of India on this point to trace the developments in this area.