A CASE STUDY OF INTERSTATE TRADE, COMMERCE IN INDIA

Best Citation – RAJ KRISHNA & SAGARIKA SWAPNIL, A CASE STUDY OF INTERSTATE TRADE, COMMERCE IN INDIA, 3 IJLR 88, 2022

ABSTRACT

Part XIII of the Indian Constitution deals with trade, commerce and intercourse within the territory of India. This Part provides for both Inter-State as well as Intra-State commerce in India. It is important to understand that a federal country can never have a uniform economy. Some of the units of a federal country may be good in the field of agriculture, the other in the industrial sector. Some States will produce the raw materials whereas the other will process and manufacture them. As a result, it is important that all the inter-state trade barriers are removed so that every unit of the country may prosper. For the last 70 years the Constitutional Courts in India have tried to maintain a balance between the sovereign power of a State to impose tax and the right of a business entity to do business without being charged with discriminatory taxes. In the year 2016 a nine-judge bench of the Supreme Court upheld the constitutional validity of the Entry Tax imposed by States on goods coming in from other states. The Court ruled that “a tax on entry of goods into a local area for use, sale or consumption therein is permissible although similar goods are not produced within the taxing state.” However, the majority in its ruling did not define what comes under the ambit of local areas. The majority on the aspect of local areas ruled that “the question that whether the entire State can be notified as a local area and whether entry tax can be levied on goods entering the landmass of India from another country are left open to be determined in appropriate proceedings.” As a result, it is important to undertake a study upon this topic