Article 303 of the Costitution of India with Case law
🇮🇳 Article 303 of the Constitution of India
Topic: Restrictions on the legislative powers of the Union and the States with regard to trade and commerce
🔹 Text of Article 303 (Simplified):
Clause (1):
Neither Parliament nor any State Legislature shall make any law that gives:
Preference to one State over another, or
Discriminates between States
in matters of trade, commerce, or intercourse.
✅ Exception (Clause 2):
Parliament may make such a law only if it is necessary to:
Deal with a situation of scarcity of goods in any part of India.
🧾 Purpose of Article 303:
To ensure economic unity and non-discrimination among States.
Prevents regional favoritism in trade and commerce.
Supports the broader goal of free trade across the Indian Union (connected with Article 301).
🔁 Relation to Other Articles:
| Article | Subject | Relationship |
|---|---|---|
| 301 | Freedom of trade and commerce | Guarantees free trade |
| 302 | Parliament can impose restrictions | Permits reasonable restrictions |
| 303 | No preference/discrimination between States | Restricts discriminatory legislation |
| 304 | States can impose taxes with conditions | Limited power to regulate trade |
⚖️ Important Case Laws on Article 303:
🔹 1. Atiabari Tea Co. v. State of Assam, AIR 1961 SC 232
Facts: Assam imposed a tax on transport of tea across the State.
Held: Article 303 prohibits preferential treatment by Parliament or States.
Any discrimination must be justified under Article 302 or 304, and not violate Article 303.
🔹 2. State of Madhya Pradesh v. Bhailal Bhai, AIR 1964 SC 1006
Held: Article 303(1) prevents discriminatory trade practices by States unless backed by Parliament under clause (2) in exceptional cases like scarcity.
🔹 3. The State of Kerala v. Abdul Kadir, AIR 1970 SC 1912
Issue: Kerala law gave preference to local traders.
Held: Violated Article 303(1), as it discriminated against traders from other States.
🔹 4. Gujarat Ambuja Cements Ltd. v. Union of India, (2005) 4 SCC 214
Held: Parliament can legislate preferentially only if it satisfies the exception under Article 303(2) — i.e., public interest due to scarcity must be demonstrated.
✅ Summary Table:
| Clause | Provision |
|---|---|
| 303(1) | No law to give preference or discriminate between States in trade |
| 303(2) | Exception: Parliament can legislate for preference only to deal with scarcity |
| Nature | Restrictive provision – ensures economic equality |
| Applies to | Both Union and State Legislatures |
🧭 Key Takeaway:
Article 303 restricts arbitrary economic legislation that might favor one State over another.
The Supreme Court has consistently upheld the principle of economic federalism, allowing exceptions only in genuine emergency or scarcity situations, and only through Parliament — not State laws.
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