Abstract
The Constitution of India provides for a federal arrangement wherein the powers and functions are well-divided between the two layered government, i.e., the central government and the state governments. Of the many opportunities federal set-up offers, the constituents are blessed to operate in a large open market. The integration of open market would guarantee economic growth on account of its competitiveness and the free flow of goods. The benefit of a common market in a federal arrangement of government depends upon the constitutional arrangement, commitment of the constituent governments, and effectiveness and control of the national government to monitor the unhindered movement of goods and services across the jurisdiction of the state governments.
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Notes
- 1.
Viner (1950).
- 2.
Shenfield (1965).
- 3.
Article 2 reads as “The Community shall have as its task, by establishing a common market and progressively approximating the economic policies of the Member States, to promote throughout the community a harmonious development of economic activities, a continuous and balanced expansion, an increase in stability, an accelerated raising of the standard of living and closer relations between the States belonging to it.”
- 4.
Schwarze (2006).
- 5.
Designated Authority Anti-Dumping Directorate Ministry Of Commerce v M/s. Haldor Topsoe A/s. AIR 2000 SC 2556.
- 6.
East African Community Market Protocol, East African Business Council. The East African Community is an intergovernmental organization composed of Republic of Burundi, Kenya, Rwanda, Uganda and the United Republic of Tanzania.
- 7.
Oates (1999).
- 8.
For the purpose of this paper, three expressions, common market, internal market and single market, are used synonymously.
- 9.
Jindal Stainless Ltd. v State of Haryana MANU/SC/1475/2016, para 477.
- 10.
Sarkaria Commission, para 18.3.07.
- 11.
CAD Vol. III 438 Clause 10, which guarantee trade and commerce free, ran as:
“Subject to regulation by the law of the Union trade, commerce, and intercourse among the units by and between the citizens shall be free:
Provided that any Unit may by law impose reasonable restrictions in the interest of public order, morality or health or in an emergency:
Provided that nothing in this section shall prevent any Unit from imposing on goods imported from other Units the same duties and taxes to which the goods produced in the Unit are subject:
Provided further that no preference shall be given by any regulation of commerce or revenue by a Unit to one Unit over another.”
- 12.
CAD Vol. III 476.
- 13.
Article 244 of the Draft Constitution read as “Notwithstanding anything contained in Article 16 or in the last preceding Article of this Constitution, it shall be lawful for any State—
(a) to impose on good 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) to impose by land such reasonable restrictions on the freedom of trade, commerce or intercourse with that State as may be required in the public interests:
Provided that during a period of five years from the commencement of this Constitution the provisions of Clause (b) of this Article shall not apply to trade or commerce in any of the commodities mentioned in Clause (a) of Article 306 of this Constitution.”
- 14.
CAD Vol. VII 803.
- 15.
“297.—(1) No Provincial Legislature or Government shall—
(a) by virtue of the entry in the Provincial Legislature List relating to trade and commerce within the Province, or the entry in that list relating to the production, supply, and distribution of commodities, have power 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; or
(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 Province 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 province, discriminates between goods manufactured or produced in one locality and similar goods manufactured or produced another locality.
(2) Any law passed in contravention of this Section shall, to the extent of the contravention, be invalid.”
- 16.
Atiabari Tea Co. Ltd. v State of Assam MANU/SC/0030/1960, para 11.
- 17.
Article 302: Parliament may by law impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India, as may be required in the public interest.
- 18.
The Automobile Transport (Rajasthan) Ltd. v State of Rajasthan MANU/SC/0065/1962, para 54.
- 19.
Sarkaria Commission, para 18.3.13.
- 20.
Article 303 (1): “Notwithstanding anything in article 302, the Parliament shall not have power to make any law giving, or authorising the giving of, any preference to one State over another, or making, or authorising the making of, any discrimination between one State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule.”
- 21.
Article 304: “Restrictions on trade commerce and intercourse among states: Notwithstanding anything in Article 301or 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 or a State without the previous sanction of the President.”
- 22.
Anand Commercial Agencies v The Commercial Tax Officer VI Circle, Hyderabad MANU/SC/0808/1998.
- 23.
Sarkaria Commission, para 18.4.03.
- 24.
Sarkaria Commission, para 18.3.14.
- 25.
Ibid. 18.4.05.
- 26.
Sarkaria Commission, para 18.4.07.
- 27.
Puncchi Commission, para 10.3.03.
- 28.
Ibid. para 10.3.04.
- 29.
Puncchi Commission, para 10.2.3.
- 30.
Ibid. para 10.3.06.
- 31.
Ibid (n. 20) para 49.
- 32.
For instance, Malwa Bus Service (Private) Ltd. v State of Punjab MANU/SC/0263/1983, the court has laid down a guideline that the amount of collection should be proportionate to the cost incurred on facilitating trade; Mrs. Meenakshi v State of Karnataka MANU/SC/0275/1983, the court has observed that enhanced tax does not lose character of being compensatory.
- 33.
“Clause 1 of Article 246 A gives right to parliament and the legislator of every state can make the law in respect of goods and service tax to be imposed by central or state government. This amendment would subsume the taxes like Excise duty, Service tax, Central Sales tax at Central level and VAT, Entry tax, Entertainment tax etc. at State level. Clause 2 brings inter-state trade and commerce is “exclusively” under central government jurisdiction.”
- 34.
Article 248 (1).
- 35.
“Article 268 (1) provides the provision of levy of stamp duty and excise duty on medicinal and toilet preparation by union government and collection by state or by union; Article 268A provides power to government of India to levy the service tax and collected and apportioned by government of India and State.”
- 36.
Article 279A.
- 37.
Ibid (n. 18) para 38.
- 38.
Ibid (n. 20) para 13.
- 39.
(1934) US 511.
- 40.
Express Hotels v State of Gujarat MANU/SC/0179/1989, para 12.
- 41.
(n. 20) para 46.
- 42.
State of Mysore v H Sanjeeviah MANU/SC/0044/1967. The Court has declared that the absolute prohibition of movement against forest produce between 10.00 PM and sun-rise as violative of Article 301.
- 43.
Article 286 reads as “(1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place—
(a) outside the State; or
(b) in the course of the import of the goods into, or export of the goods out of, the territory of India.
1 * * * *
2 [(2) Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1).
3 [(3) Any law of a State shall, in so far as it imposes, or authorises the imposition of,—
(a) a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce; or
(b) a tax on the sale or purchase of goods, being a tax of the nature referred to in sub-clause (b), subclause
(c) or sub-clause (d) of clause (29A) of article 366, be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify.”
- 44.
The Bengal Immunity Co. Ltd. v State of Bihar MANU/SC/0083/1955.
- 45.
State of Madhya Pradesh v Bhailal Bhai MANU/SC/0029/1964, the Court has invalidated sales tax on the sale of imported tobacco imposed by the Government of Madhya Pradesh whereas no such tax was imposed upon the sale of indigenous tobacco.
- 46.
The Automobile Transport (Rajasthan) Ltd. v State of Rajasthan MANU/SC/0065/1962, para 56.
- 47.
Bishambhar Dayal Chandra Mohan v State of Uttar Pradesh MANU/SC/0056/1951, para 36.
- 48.
State of Bihar v Harihar Prasad Debuka MANU/SC/0533/1989, para 14.
- 49.
State of UP v Jai Prakash Associates MANU/SC/1085/2013, para 47.
- 50.
MANU/SC/2085/2006, para 41.
- 51.
MANU/SC/1475/2016.
- 52.
Ibid, para 475.
- 53.
Sarkaria Commission, para 18.4.08.
References
Oates, W. (1999). An essay in fiscal federalism. Journal of Economic Literature, 37(3), 1120–1149.
Schwarze, J. (2006). The development of the European Union from a common market to a political union. Ritsumeikan Law Review, 91.
Shenfield, A. A. (1965, April). The two faces of common market. Selected Papers No. 6, Graduate School of Business, University of Chicago, Second Printing April 1965, 4.
Viner, J. (1950). The customs union issue. New York: Carnegie Endowment for International Peace.
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Shankar, U. (2019). Common Market Under the Constitution of India. In: Singh, M., Cremer, W., Kumar, N. (eds) Open Markets, Free Trade and Sustainable Development. Springer, Singapore. https://doi.org/10.1007/978-981-13-7426-5_13
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